The proposed bill amends the Income Tax Act of 1967 by adding a new section that allows taxpayers who own agricultural assets to claim a tax credit for selling or renting these assets to beginning farmers. Effective for tax years starting January 1, 2025, the credit is structured as follows: 5% of the sale price or fair market value of the agricultural asset (up to $32,000) for sales; 10% of gross rental income for qualified rental agreements (up to $7,000 per year for three years); and 15% of the cash equivalent of gross rental income for share rent agreements (up to $10,000 per year for three years). Taxpayers must obtain a certificate from the relevant department to claim the credit, which is capped at a total of $5 million per calendar year.

Additionally, the bill outlines specific requirements for both the taxpayer and the beginning farmer, including definitions of agricultural assets and beginning farmers, as well as the necessary documentation to claim the credit. The department will also be required to submit an annual report on the effectiveness of the credit, detailing the number of credits issued, geographic distribution, and the impact on beginning farmers. The bill aims to support new entrants into farming by providing financial incentives for established farmers to sell or rent their assets.

Statutes affected:
Senate Introduced Bill: 206.1, 206.847