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S.F. No. 1414 - Beginning farmer program and tax credit
 
Author: Senator Michael P. Goggin
 
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
 
Date: March 13, 2017



 

This bill establishes a beginning farmer program, administered by the Rural Finance Authority, and authorizes a nonrefundable tax credit for certain sales or rentals of agricultural assets to beginning farmers and for participating in a beginning farmer financial management program. Effective beginning in tax year 2017.

Section

Provision

1, subd. 1

Establishes definitions for the beginning farmer program, including:

“Agricultural assets” means agricultural land, livestock, facilities, buildings and machinery used for farming in the state.

“Beginning farmer” is a resident of the state who is seeking to farm or has entered into farming within the last ten years; intends to farm on land in Minnesota; and is not related to the owner of agricultural assets that the farmer intends to rent or purchase. The beginning farmer must also meet several criteria, as determined by the Rural Finance Authority.

“Share rent agreement” means a rental agreement wherein the principal consideration to the owner of agricultural assets is a predetermined amount of the production of farm products produced from the rented agricultural assets and which provides for sharing production costs or risk of loss, or both.
 

Subd. 2

Authorizes owners of agricultural assets to claim a tax credit for the sale or rental of agricultural assets to a beginning farmer. The credit is nonrefundable and may be carried forward for up to 15 years. The credit may be claimed only after approval and certification by the authority. The credit equals:

  • 5% of the sale price of the agricultural asset;
  • 10% of the gross rental income in each of the first, second, and third years of a rental agreement; or
  • 15% of the cash equivalent of the gross rental income in each of the first, second, and third years of a share rent agreement.

Provides terms for clawback of the credit in certain circumstances.
 

Subd. 3

Authorizes beginning farmers to claim a credit for the cost of participating in a financial management program approved by the Rural Finance Authority for up to three years while the farmer is in the program. 
 

Subd. 4

Requires the Rural Finance Authority to approve and certify beginning farmers and owners of agricultural assets as eligible for the program, and requires the Authority to provide necessary assistance and referrals to beginning farmers.
 

Section 2

Adds the beginning farmer incentive and beginning farmer management credits to the income tax chapter. The credits may only be claimed upon approval and certification by the Rural Finance Authority.

 

 
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