The Minnesota Department of Agriculture has launched its annual tax credit program for landlords and asset owners who support beginning farmers. This initiative offers significant incentives for those involved in the agricultural sector, aiming to foster a new generation of farmers and revitalize rural economies.

Seize Your Chance to Support Tomorrow's Farmers

Promoting Agricultural Growth Through Financial Incentives

The Minnesota Department of Agriculture’s Rural Finance Authority is now inviting applications for the 2025 Beginning Farmer Tax Credit. This crucial program provides substantial financial benefits to individuals or entities that lease or sell farmland, equipment, livestock, and other agricultural assets to novice farmers. The initiative aims to encourage sustainable farming practices and bolster economic development in rural areas.Landlords and asset owners can claim credits based on various categories, each offering distinct advantages. For cash rentals, a tax credit equivalent to 10% of annual rental income, capped at $7,000, is available. Share crop rentals attract a more generous 15% of annual rental income, with a maximum limit of $10,000. These incentives not only benefit the asset owners but also provide much-needed financial support to budding farmers.

Navigating the Sales and Tuition Reimbursement Credits

For those selling agricultural assets, including farmland, a tax credit of 8% of the sale price applies, increasing to 12% if the buyer qualifies as an emerging farmer. The maximum allowable credit for sales stands at $50,000. Additionally, beginning farmers can receive tuition reimbursement for farm business management courses, up to $1,500 per year for three years. This provision ensures that aspiring farmers have access to essential education and training resources.Given the limited funds allocated—$4 million—the application process operates on a first-come, first-served basis. Early submissions are strongly encouraged to secure eligibility before the deadlines. Applications must be accompanied by relevant documentation, such as lease agreements or sale contracts, to ensure compliance with program requirements.

Eligibility Criteria for Asset Owners and Beginning Farmers

Qualifying asset owners encompass a broad range of entities, including individuals, trusts, LLCs, partnerships, S-corps, and qualified pass-through entities. Notably, parents, grandparents, and siblings are now eligible for the tax credit if they sell farmland to direct family members. However, this does not extend to leases or non-land sales like livestock or vehicles.Beginning farmers must meet specific criteria to qualify for these incentives. They should be Minnesota residents with a desire to start farming or have begun within the past decade. Applicants must demonstrate positive projected earnings, possess a net worth below $1,013,000, and enroll in or complete an approved farm business management program. Exceptions exist for those with a four-year agricultural degree, relevant work experience, or prior completion of an FBM program.

Empowering Emerging Farmers in Minnesota

Emerging farmers represent a diverse group, including women, veterans, persons with disabilities, American Indian or Alaskan Natives, members of communities of color, young individuals (35 and younger), LGBTQIA+ community members, urban residents, and others designated by the commissioner. These farmers may receive enhanced benefits, such as a 12% tax credit on farmland sales, further supporting their entry into agriculture.

Beyond Minnesota: Exploring Other State Initiatives

Several states offer similar tax credit programs for beginning farmers, including Nebraska, Iowa, Ohio, Kentucky, and Pennsylvania. Each state tailors its incentives to address local needs and promote agricultural sustainability. By examining these programs, aspiring farmers can gain valuable insights and identify opportunities beyond Minnesota’s borders.For comprehensive information and application materials, visit the official Beginning Farmer Tax Credit web page. Questions can be directed to Jenny Heck at jenny.heck@state.mn.us or (651) 201-6316.