Minnesota Tax Credits Approved for Young and Beginning Farmers
I talked with Minnesota House of Representatives Nels Pierson (R-Rochester, MN) today about his recent efforts co-authoring a neat bill for agriculture. No matter the business there are often barriers to entry and in agriculture young and beginning farmers will take any break they can get. In Minnesota just 6% of farmers are 35 years old or under and on Tuesday Minnesota Governor Mark Dayton signed Nels bill that included tax credits supporting the transition of farms to young and beginning farmers.
Landowners and ag producers can receive a state income tax credit when they sell or rent land or agricultural assets like machinery or livestock to a beginning farmer. (Beginning farmer = entered farming within the last 10 years.) The credit equals 5% of the sale price or 10% of the cash rent or 15% of a cash share agreement. Sales to related parties do not qualify and equipment dealer sales do not qualify.
The beginning farmer must take a farm management course to quality for the tax incentive and could be eligible for a tax credit to cover the cost of the training. The tax credit is effective for the 2018 tax year and is funded at $12M with a sunset in 2023. The credit is available on a first-come first-serve basis and is subject to some annual limits.
Looks like a win for agriculture in Minnesota and should help pave the way for the next generations of farmers. Helping farmers of all sizes, rural or urban, conventional or organic the credit is a real nice bargaining chip for a beginning farmer to negotiate with an established ag producer or landlord saying work with me and you will save on income tax. Farmers love saving on income taxes, don’t we all.
Special thanks to Joseph Duda of our Rochester, Minnesota office for this post.