Committee hears technical changes to estate tax natural-resource exemption

The Senate Committee on Rules took testimony June 20 on House Bill 3630, a technical revision to the estate tax natural-resource exemption adopted in 2023.

Representative Kevin Mannix, who introduced the bill, said the 2023 law (Senate Bill 498) created an exemption intended to help family-owned farms, ranches and woodlands remain in family ownership by exempting qualifying natural-resource property from estate tax if it remains in the family for five years. Mannix said practitioners later asked for statutory clarifications to accommodate modern ownership forms such as limited liability companies and trusts.

Under HB 3630, qualified property may include ownership or a beneficial interest held by businesses or trusts. The bill also revises look-back and look-forward participation rules for decedents and heirs, allows qualified property to be replaced in an exchange for other qualified property, and excludes qualified property from the ratio used to calculate taxes for estates with both in-state and out-of-state property. The measure applies to estates of decedents dying on or after July 1, 2025.

Jonathan Hart, an economist with the Legislative Revenue Office, told the committee the administrative rules already implemented most of the clarifications and that the bill’s changes are reflected in the forecast; he described the measure as revenue neutral. Mannix described the bill as “a technical update and change bill, which does not have any real effect on revenue, but is important for those folks who are trying to plan ahead for how they structure the family ownership of farms, ranches, and woodlands.”

No committee vote was recorded during the hearing.