What are the eligibility requirements for family farms to qualify for estate tax exemptions?

1. Summary of the results

Based on the analyses provided, there are two primary pathways for family farms to qualify for estate tax exemptions:

Section 2032A Special Use Valuation Requirements:

• The farm estate must contain real property used in farming with a fair market value of at least 25% of the total adjusted estate value ^[1]
• Farm assets (both real and personal property) must comprise at least 50% of the estate ^[1]
• The farm real property must have been owned by the deceased or a family member for five of the previous eight years ^[1]
• Executors can deduct up to $1.42 million of land value from net worth in 2024 ^[2]
• Families must commit to continue farming for at least 10 years without harvesting timber or selling conservation easements ^[2]

Section 6166 Deferred Payment Option:

• Active farm assets must be at least 35% of the adjusted taxable estate ^[1]
• This allows estates to pay estate taxes over time at a low interest rate ^[1]

Current Estate Tax Exemption Levels:

• The One Big Beautiful Bill Act permanently increases the federal estate tax exemption to $15 million per individual ($30 million per couple), indexed for inflation ^{[3] [4]}
• Some sources reference an even higher exemption of $28 million per person through 2035 ^[5]

2. Missing context/alternative viewpoints

The original question lacks several critical contextual elements:

Historical Context and Urgency:

• The estate tax exemption was set to drop by 50% to $7.61 million on January 1, 2026 before recent legislative changes ^[2]
• The exemption was doubled in 2017 to $11 million per individual, and reverting to the pre-2017 level of $5.5 million would have caused nearly twice as many farms to pay estate taxes ^[2]

Farm Valuation Challenges:

• Average net worth of American farm families was $2.5 million in 2023, with $1.8 million in agricultural land and buildings alone ^[2]
• Farmland values continue to grow, and many farms have high-value assets besides land, such as machinery ^[2]
• Section 2032A specifically protects farmland from being valued at higher development prices rather than agricultural use value ^[2]

Additional Tax Benefits:

• The legislation preserves the stepped-up basis provision, allowing heirs to reset the cost basis of inherited assets to fair market value at the time of death ^[3]

3. Potential misinformation/bias in the original statement

The original question itself does not contain misinformation, as it is a straightforward inquiry about eligibility requirements. However, the question lacks important temporal context that could lead to confusion:

Timing Sensitivity:

• The question doesn't acknowledge that estate tax exemption rules have been subject to significant recent changes and were facing a major reduction before legislative intervention ^[2]
• Without this context, readers might not understand the urgency and political significance of these exemptions for farming families

Complexity Understatement:

• The simple phrasing of "eligibility requirements" doesn't capture the multiple pathways and complex calculations involved in estate tax planning for farms
• It doesn't reflect that farms face unique challenges due to land appreciation and asset-heavy business models that can trigger estate taxes even for families with modest cash flow ^[2]

The analyses reveal that agricultural lobbying groups and farm advocacy organizations would benefit significantly from maintaining and expanding these exemptions, as they protect family farm succession and prevent forced land sales to pay estate taxes.