Year-end tax planning for agricultural producers and general taxpayers must be done by "what is known" regarding current federal tax code, even though there’s uncertainty about extending certain tax cuts, according to Texas AgriLife Extension Service economists.

Jose Pena, AgriLife Extension economist-management at the Texas AgriLife Research and Extension Center in Uvalde, said it’s currently unknown if Congress will extend tax cuts that are part of the 2001 Economic Growth and Tax Relief Reconciliation Act.

If the tax cuts imposed under the Bush administration are not extended, all tax rates will rise for all individual taxpayers, including those subject to the lowest tax rates, he said.

"Year-end tax planning appears confusing as the political climate in Congress changes and Congress remains in a stalemate over extending the tax cuts, which are scheduled to expire Dec. 31," Pena said.

A hot-button item among agriculture producers is the estate tax, which was repealed in 2010. Under current law, there is no federal estate tax, but heirs who sell appreciated assets may face capital gains taxes.

"In 2011, the estate tax is set to return with a $1 million exemption and a top rate of 55 percent on the largest estates," Pena said. "But it appears some Congressmen are pondering a $3.5 million exemption with a 45 percent top rate, which over the years would evolve into a $5 million exemption and a maximum tax rate of 35 percent. It appears, however, that the estate tax is not going to disappear."

Meanwhile, he said, agricultural producers and small business owners may be able to take advantage of some extended tax cuts as part of the Small Business Jobs Act of 2010 signed into law in September.