INDIANAPOLIS, Ind. — Farmers and others with large estates claimed a legislative victory when Indiana Gov. Mitch Daniels signed into law a gradual repeal of the inheritance tax last week.

“It will affect farmers very positively. Anything that allows farmers to pass more of their farm on to the next generation is very welcome,” said Robert Kraft, state director of government relations for Indiana Farm Bureau.

SEA 293 will phase out the state’s inheritance tax within a nine-year period, beginning in 2013. The law also increases the total value of assets that may be passed on to children or their surviving spouses before the tax is assessed. That amount went from $100,000 to $250,000.

The elimination of Indiana’s inheritance tax has been a policy objective of Farm Bureau for decades, Kraft said.

“We all dream of passing our farms on to our kids, and this bill removes one of the significant barriers that sometimes prevents that,” Kraft said.

Another provision of the new law is that it reclassifies a spouse, widow or widower of a child or stepchild of the deceased as a Class A transferee, which means that they can inherit without added tax or penalty.

SEA 293 was authored by Sen. Jim Smith (R-Charlestown) and sponsored in the House by Rep. Eric Turner (R-Cicero).

Kraft said that Sen. Brandt Hershman (R-Buck Creek), chair of the Senate Committee on Tax and Fiscal Policy, was also instrumental in the success of the bill.

IFB President Don Villwock and IFB tax specialist, Katrina Hall, joined Gov. Daniels as he signed the bill into law on March 20.

The federal estate tax is still in force, however, and will impact many farmers as they attempt to pass on their assets.

“(The repeal of the state tax) is good news. But Farm Bureau still encourages an estate of any size to seek professional advice in planning to make sure as much as possible is passed on to the next generation,” Kraft cautioned.

Upon questioning, Kraft replied that the only opposition to the bill came from extremely liberal Democrats, who saw this bill as benefiting the wealthy at the expense of the underprivileged.

The phase out of the state inheritance tax, sometimes called the “death tax,” was not the only legislative triumph for Indiana agriculture this year.

“The stars aligned for major legislative success ... It was a very good legislative session; we are very pleased,” Kraft said.

The following successes were highlighted by Kraft: the delay of new soil productivity adjustments for farmland reassessment; the exclusion of aquifers from regulation by cities and towns, and awards to farmers for court costs and attorney’s fees in a frivolous lawsuit brought against them.