Minnesota Expands Tax Credit to Boost Beginning Farmers and Land Transfer

Friday, June 23, 2023

Owners of agricultural assets in Minnesota now have more reasons to lease or sell their land to beginning farmers, thanks to an expanded tax credit program. The Beginning Farmer Tax Credit, administered by the Minnesota Department of Agriculture's Rural Finance Authority (RFA), aims to incentivize land transfer and support the growth of farming in the state.

Important Updates:

• Increased Tax Credits: Buyers can now receive 8% of the sale price as a tax credit, rising to 12% for emerging farmers (previously 5% for all).

• Higher Maximum Credit: The maximum tax credit has been raised to $50,000 (previously $32,000).

• Extended Family Eligibility: Direct family members like parents, grandparents, and siblings are now eligible for farmland sales.

Who Qualifies?

Individuals, trusts, or qualified pass-through entities that lease or sell farming-related assets such as land, livestock, facilities, buildings, or machinery in Minnesota can apply. To be considered a beginning farmer, applicants must be Minnesota residents who have either recently started farming or have been farming in the state within the past 10 years. They should provide positive projected earnings, have a net worth below $979,000, and be enrolled in or have completed an approved farm business management (FBM) program.

Categories and Deadlines:

• Cash Rentals: Tax credit of 10% of annual rental income, up to $7,000. Application deadline: July 17, 2023.

• Share Crop Rentals: Tax credit of 15% of annual rental income, up to $10,000.

• Farmland Sales: Tax credit of 8% of the sale price (12% for emerging farmers), up to $50,000. Application deadline: November 1, 2023.

• Other Sales (equipment, livestock, etc.): Tax credit of 5% of the sale price, up to $32,000.

Additional Benefits:

Beginning farmers are also eligible for a nonrefundable Minnesota tax credit, up to $1,500, covering their farm business management (FBM) tuition expenses. This credit can be claimed for up to three years.

For detailed eligibility requirements and application materials, visit the Beginning Farmer Tax Credit webpage. If you have any questions, contact Jenny Heck at Jenny.Heck@state.mn.us or 651-201-6316.