OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 183 Bill Analysis
133rd General Assembly
Click here for H.B. 183’s Fiscal Note
Version: As Reported by House Agriculture and Rural Development
Primary Sponsors: Reps. Manchester and Patterson
Effective Date:
Joe McDaniels, Attorney
SUMMARY
Authorizes a nonrefundable income tax credit for individuals who are certified as
“beginning farmers” and who attend a financial management program.
Authorizes a nonrefundable income tax credit for individuals or businesses that sell or
rent farmland, livestock, buildings, or equipment to beginning farmers.
Requires the Director of Agriculture, and allows land grant state universities, to certify
individuals as beginning farmers.
Limits the credit to two years, 2020 and 2021.
Limits the total amount of tax credits awarded over those two years to $10 million.
DETAILED ANALYSIS
Tax credits to assist beginning farmers
The bill authorizes two new income tax credits: one for individuals who are certified as
“beginning farmers” and attend a financial management program, and another for individuals
or businesses that sell or rent farmland, livestock, buildings, or equipment to beginning
farmers. The credits are authorized for only two years, 2020 and 2021.
Beginning farmers
Before either credit is awarded, an individual must first be certified as a beginning
farmer. To be eligible for certification, an individual must satisfy all of the following:
1. Intends to farm in Ohio, or has been farming in Ohio for less than ten years.
2. Has a household net worth of less than $800,000. This limit applies to 2020 and will be
adjusted for inflation in the ensuing year.
December 9, 2019
Office of Research and Drafting LSC Legislative Budget Office
3. Provides the majority of the day-to-day labor for and management of the farm.
4. Has adequate farming experience or demonstrates adequate knowledge about farming.
5. Submits projected earnings statements and demonstrates a profit potential.
6. Demonstrates that farming will be a significant source of the individual’s income.
7. Participates in a financial management program approved by the Department of
Agriculture.
8. Meets any other requirements set by the Department of Agriculture.
There are two ways for an individual to obtain certification as a beginning farmer. The
first way is to apply to the Director of Agriculture or a state university that is designated as a
land grant institution under federal law (i.e., the Ohio State University or Central State
University) and demonstrate their eligibility under the foregoing criteria.1 The second way is to
obtain a “substantially equivalent” certification from the United States Department of
Agriculture. In either case, the certification is valid until the individual no longer meets the
eligibility criteria.2
Tax credit for participation in a financial management program
An individual who holds a valid beginning farmer certification and participates in an
approved financial management program may apply to the Director of Agriculture for an
income tax credit equal to the cost of attending the program. The application must include the
name and address of the financial management program, the date or dates on which the
beginning farmer participated, and the cost of attending. If the beginning farmer is eligible and
if awarding the credit will not result in the overall credit cap being exceeded (see below), the
Director must issue a tax credit certificate.
The credit is nonrefundable, but if the credit exceeds a beginning farmer’s tax liability
for the year for which it is claimed, they can carry forward any excess credit for up to three
succeeding years.
The bill requires the Director of Agriculture to approve eligible financial management
programs and maintain a list of approved programs on the Department of Agriculture's website.
The Director must consult with the land grant colleges in formulating the list. A beginning
farmer may also receive the credit for the cost of attending a financial management program
approved by the United States Department of Agriculture.3
1R.C. 901.61(A)(7); also see, United States Department of Agriculture, NIFA Land-Grant Colleges and
Universities.
2 R.C. 901.61(A)(4) and (B).
3 R.C. 901.61(C) and (E) and 5747.72(B).
P a g e |2 H.B. 183
As Reported by H. Agriculture and Rural Development
Office of Research and Drafting LSC Legislative Budget Office
Tax credit for the sale or rental of farm assets
An individual or business that sells or rents “agricultural assets” to a beginning farmer
also may apply to the Director of Agriculture for a tax credit. Agricultural assets include land,
livestock, facilities, buildings, and machinery used in farming.4 Equipment dealers and similar
businesses that sell agricultural assets for profit are not eligible for the credit. The application
must include the name of the beginning farmer, the date the sale or lease was made, and other
financial information about the sale or lease. If the sale or lease is eligible and awarding the
credit will not result in the overall credit cap being exceeded (see below), the bill requires the
Director to issue a tax credit certificate. The credit equals one of the following:
1. In the case of a sale, 5% of the sale price.
2. In the case of a rental, 10% of the gross rental income that the individual or business
received during the first three years of the rental agreement. The bill requires that, to
qualify, an asset must be rented at prevailing community rates.
3. In the case of a rental through a share-rent agreement, 15% of the cash equivalent of
the gross rental income received during the first three years of the share-rent
agreement. (A share-rent agreement is an arrangement by which, in exchange for the
rented assets, the beginning farmer provides the owner of the assets with a specified
portion of the farm products produced from the assets.)
In the case of a sale, the credit must be claimed in the year of the sale. In the case of a
rental, the credit is claimed over the three years of the rental or share-rent agreement. The
credit is nonrefundable. However, if the credit exceeds the taxpayer’s liability for any year for
which it is claimed, the taxpayer can carry forward any excess credit for up to 15 years.5
Cap and sunset
The total amount of tax credits awarded under the bill is limited to $10 million. Tax
credit certificates may not be awarded after December 31, 2021.6
Effective date
The credits may be claimed for taxable years beginning in 2020 or thereafter and ending
on or before December 31, 2021.7
4 R.C. 901.61(A)(1) and (2). In order for land to qualify as an agricultural asset, the land must total at
least ten acres or produce an average annual income of at least $2,500 from farming.
5 R.C. 901.61(A) and (D) and 5747.72(A).
6 R.C. 901.61(F).
7 R.C. 5747.72 and Section 3 of the bill.
P a g e |3 H.B. 183
As Reported by H. Agriculture and Rural Development
Office of Research and Drafting LSC Legislative Budget Office
HISTORY
Action Date
Introduced 04-03-19
Reported, H. Agriculture and Rural Development 11-19-19
H0183-RH-133/ec
P a g e |4 H.B. 183
As Reported by H. Agriculture and Rural Development
Statutes affected: As Introduced: 5747.02, 5747.98
As Reported By House Committee: 5747.98