The Minnesota Beginning Farmer Tax Credit provides annual tax credits to 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 submit applications early in the year.

This is a two-part application. Both beginning farmers and asset owners must submit applications by July 17, 2023 for rentals and by November 1, 2023 for sales. If you are a beginning farmer only submitting a tuition reimbursement application, it is due by November 1, 2023.

Beginning Farmer Eligibility

  • A Minnesota resident who is seeking entry, or has entered into farming within the last 10 years.
  • A farmer who will provide the majority of labor and management on a farm that is located in Minnesota.
  • Must be enrolled in or have completed an approved financial business management (FBM) program within ten years of their first year of farming: List of Approved FBM Programs
    • Beginning farmers are eligible for a nonrefundable MN income tax credit equal to their tuition paid up to a maximum of $1,500. The credit is available for up to three years.
    • 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.
    • Beginning farmers may request to waive the FBM program requirement if they have a 4-year agricultural degree or reasonable work experience in agricultural finance.
  • Has adequate experience and knowledge of the type of farming for which they seek assistance from the Rural Finance Authority.
  • Can provide positive projected earnings statements.
  • Is not directly related to the owner of the agricultural asset. This includes parents, grandparents, brothers, sisters, spouses, children, and grandchildren. Legal adoption shall be considered in full effect.
  • Has a net worth that does not exceed the limit provided under section 41B.03, subdivision 3, paragraph (a), clause (2). This limit is $903,000 in 2022.

Tax Credit Details

  • The tax credit will go to the asset owner (landlord/seller) as follows:
    • 5% of the sale price up to a maximum of $32,000,
    • 10% of the annual rental income of a cash lease up to a maximum of $7,000,
    • Or 15% of the annual rental income of a share rent agreement up to a maximum of $10,000.
    • The asset owner can claim credits in one of the above categories in a given tax year for each beginning farmer they work with.
  • Asset owners may claim the tax credit for as many years as the beginning farmer(s) they work with are eligible.
  • 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 income taxes, which can be carried forward for up to ten years.
  • The asset owner may be an individual, trust, or qualified pass-through entity. The owner of agricultural assets cannot be an equipment dealer, livestock dealer, or comparable entity engaged in the business of selling agricultural assets for profit.

Role of the Rural Finance Authority (RFA)

The RFA will administer the tax credits by:

  • Certifying beginning farmers
  • Assisting beginning farmers with locating eligible financial management program options in their area
  • Certifying that owners of agricultural assets are eligible for the tax credit. This is a first come, first served initiative. The amount available in 2022 is about $19 million.