Owners of agricultural assets that lease or sell to beginning farmers in Minnesota may be eligible for the Beginning Farmer Tax Credit, which is open for applications through the Minnesota Department of Agriculture’s (MDA) Rural Finance Authority (RFA).
Those who have previously applied should take note of the new application deadlines for rentals (July 17) and sales (November 1). Additionally, recent legislative changes have resulted in several updates to the program to further incentivize farmland sales:
- An increase in the tax credit amount to 8% of the sale price for buyers and 12% if the buyer is an emerging farmer (previously 5% for all).
- A new maximum tax credit of $50,000 (previously $32,000).
- Direct family members such as parents, grandparents, and siblings are now eligible for farmland sales.
Qualifying applicants can include individuals, trusts, or qualified pass-through entities renting or selling land, livestock, facilities, buildings, or machinery used for farming in Minnesota to a beginning farmer.
A beginning farmer is defined as a Minnesota resident with the desire to start farming or who began farming in Minnesota within the past 10 years. They must provide positive projected earnings statements, have a net worth less than $979,000, and enroll in, or have completed, an approved farm business management (FBM) program.
Asset owners can claim credits in one of the below categories in a given tax year for each beginning farmer they lease/sell to:
| Tax Credit Amount | Maximum Tax Credit | Application Due Date | |
|---|---|---|---|
| Cash Rentals | 10% of annual rental income | $7,000 | July 17, 2023 |
| Share Crop Rentals | 15% of annual rental income | $10,000 | July 17, 2023 |
| Farmland Sales | 8% of sale price (12% if the buyer is an emerging farmer) |
$50,000 | November 1, 2023 |
| All other sales (equipment, livestock, etc.) |
5% of sale price | $32,000 | November 1, 2023 |
To be eligible for the tax credit, both the asset owners and beginning farmers must submit applications.
Beginning farmers are also eligible for a nonrefundable Minnesota tax credit equal to the amount paid for FBM tuition, up to a maximum of $1,500. This tax credit is available for up to three years.
Full eligibility requirements and application materials can be found on the Beginning Farmer Tax Credit webpage. Questions may be directed to Jenny Heck at Jenny.Heck@state.mn.us or 651-201-6316.
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Media Contact
Logan Schumacher, MDA Communications
651-201-6193
Logan.Schumacher@state.mn.us
