Beginning Farmer Tax Credit

Getting more beginning farmers on the land is critical to vibrant rural communities and stewardship of our resources. That is why the Minnesota Beginning Farmer Tax Credit was championed by the Land Stewardship Project for over 10 years. With the leadership of Rep. Nels Pierson (R-Rochester), it was finally passed by the Minnesota Legislature and signed into law by Governor Mark Dayton in 2017. This law provides an incentive to sell or rent land or other agricultural assets—machinery, buildings, facilities, livestock, etc.—to a beginning farmer. This state tax credit will become available for the first time in January 2018. The program is being administered by the Minnesota Rural Finance Authority.

The credit available to the asset owner is:

• 5 percent of the sale price or fair market value—whichever is less—of the agricultural asset, up to a maximum of $32,000.
• 10 percent of the gross rental income in each of the first, second and third years of the rental agreement, up to a maximum of $7,000 per year.
• 15 percent of the cash equivalent of the gross rental income in each of the first, second and third years of a share rent agreement, up to a maximum of $10,000 per year.

To qualify for these credits, the “beginning farmer” involved must be someone who:

• Is a Minnesota resident who is seeking entry, or has entered into farming within the past 10 years.
• Is a farmer who will provide the majority of the labor and management of the farm that is located in Minnesota.
• Can provide positive projected earnings statements.
• Is not directly related to the owner of the agricultural asset.
• Has a net worth that does not exceed $800,000.
• Is enrolled in a financial management program approved by the Rural Finance Authority.

More Information

The Land Stewardship Project's goal is to have more people farming on the land, and the Minnesota Beginning Farmer Tax Credit is one tool that can provide a pathway toward that goal. For farmers interested in more information about the Beginning Farmer Tax Credit and/or interested in attending a meeting with more specifics about the program and how to apply, please submit your name and contact information. More details are also available from the Rural Finance Authority and by downloading LSP's Beginning Farmer Tax Credit fact sheet.