The budget deal struck late Thursday by the White House and congressional leaders includes a pledge to reduce estate taxes.

How much to cut the tax has not been decided. But two of the major banking associations are working the issue from different perspectives. The American Bankers Association wants to double the current $600,000 estate tax exemption while the Independent Bankers Association of America wants to target relief to family farms and small businesses.

The ABA's position may have the edge in Congress because the tax cuts could be phased in gradually, said Thomas P. Ochsenschlager, partner in the national tax office of accounting firm Grant Thornton LLP.

But current estate taxes are driving land-rich, cash-poor family farms out of business, argued Terry J. Jorde, president of Towner County State Bank in Cando, N.D., and chairwoman of the IBAA's agricultural committee. "Farm consolidation ... affects the whole community," she said. "Larger farms need fewer services; there's a snow-ball effect."

Owners of small family-owned businesses should not have to pay taxes on the first $1.5 million of an estate and should be taxed at half the rate on the next $8.5 million, according to IBAA.

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