The Minnesota Beginning Farmer Tax Credit provides annual state tax credits to landlords and sellers (asset owners) who rent or sell farmland, equipment, livestock, and other agricultural assets to beginning farmers. Tax credits are funded in a first-come, first-served manner. Applicants are highly encouraged to apply early in the year and may apply before sales close, if needed.
This is a two-part application. Both beginning farmers and asset owners must submit applications with leases and/or sale documents by the deadlines below.
Tax Credit Details
The tax credit will go to the asset owner (landlord/seller) as follows:
|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|
|Land Sales||8-12% of sale price*||$50,000||Nov. 1, 2023|
|5% of the sale price||$32,000||Nov. 1, 2023|
|Beginning Farmer FBM tuition reimbursement||Equal to tuition paid (see details below)||$1,500||Nov. 1, 2023|
The asset owner can claim credits in one of the above categories in a given tax year for each beginning farmer.
*Land Sale Updates, May 2023
- Parents, grandparents, and siblings are now eligible for the tax credit if they sell farmland to a direct family member. This does not apply to leases or non-land sales (livestock, vehicles, etc.)
- The new tax credit maximum for land sales is $50,000
- Credits for farmland sales will be 8% of the sale price for all buyers and 12% if the buyer is an emerging farmer
- Emerging Farmers include farmers or aspiring farmers who are women, veterans, persons with disabilities, American Indian or Alaskan Natives, members of a community of color, young (35 and younger), lesbian, gay, bisexual, transgender, queer, intersex, or asexual (LGBTQIA+), urban (reside in cities with a population over 5,000), and any other emerging farmers as determined by the commissioner.
Am I eligible?
Beginning farmer must
- Be a Minnesota resident who is seeking entry, or has entered into farming within the last 10 years.
- Provide the majority of labor and management on a farm that is located in Minnesota.
- Have some farming experience and knowledge
- Provide positive projected earnings statements.
- Have a net worth that does not exceed the limit provided under section 41B.03, subdivision 3, paragraph (a), clause (2). This limit is $979,000 in 2023.
- Be enrolled in or have completed an approved farm business management program within ten years of their first year of farming (more details below).
- May be an individual, trust, LLC, partnership, S-Corp, or other qualified pass-through entity.
- May claim the tax credit for as many years as the beginning farmer(s) they work with are eligible.
- Cannot be an equipment dealer, livestock dealer, or comparable entity engaged in the business of selling agricultural assets for profit.
- Except for farmland sales, cannot be directly related to the owner of the agricultural asset. This includes parents, grandparents, brothers, sisters, spouses, children, and grandchildren of the beginning farmer and their spouse.
Farm Business Management Requirement
Beginning farmers must be enrolled in or have completed an approved farm business management (FBM) program within ten years of their first year of farming for their asset owners to be eligible for the tax credit.
Beginning farmers are eligible for a nonrefundable Minnesota tax credit equal to their FBM tuition paid up to a maximum of $1,500. This tax credit is available for up to three years.
Beginning farmers may request to waive the FBM requirement if they have a 4-year agricultural degree, reasonable work experience in agricultural finance or have already completed an approved FBM program.
New in 2023: If the beginning farmer has already completed 30 credits of FBM courses (or the equivalent hours in another approved FBM program), they do not need to register for additional courses.
- If applying with a multi-year lease, the asset owner must reapply every three years and the beginning farmer must reapply every year to confirm eligibility.
- An “agricultural asset” is defined as agricultural land, livestock, facilities, buildings, and machinery used for farming in Minnesota
- This is a non-refundable tax credit for Minnesota state income taxes, which can be carried forward for up to 15 years.