Several states have introduced or implemented legislation to provide tax credits for farmers and incentives for rural economic development. Each piece of legislation seeks to be an economic boon to new farmers, existing farmers, and residents of rural areas.
Arkansas Tax Credits for Farmers
In Arkansas, HB1003, or “AR Next Gen,” aims to create income tax credits for beginning farmers and owners of agricultural assets. Section 2 of the bill proposes an amendment requiring the Secretary of the Department of Agriculture to certify financial management programs for beginning farmers for the income tax credit. Section 2 also proposes to add a new section that would provide definitions for terms such as “agricultural asset,” “agricultural land,” “beginning farmer,” and “owner of agricultural assets.” The section also allows for an income tax credit against the income tax liability of a beginning farmer or owner of agricultural assets. The bill also provides rules and procedures for certifying financial management programs and maintaining a list of certified programs on the department’s website.
Hawaii Tax Credit for Farmers
In Hawaii, HB607 aims to reduce the cost of interisland shipping for farmers and ranchers in Hawaii. The bill proposes an interisland produce shipping tax credit that would reimburse producers for some of the costs of transporting agricultural goods between counties. The tax credit would be equivalent to 20% of the input transportation costs for shipping produce and agricultural goods between counties, up to a maximum of $20,000 per producer. The bill limits the total tax credits to $5,000,000 for all taxpayers in any taxable year. The proposed bill is intended to support progress toward the state’s Aloha+ Challenge commitment to increase local food consumption and production.
Minnesota Tax Credit for Farmers
Minnesota lawmakers this session introduced a bill, S.F. No. 1879, that aims to modify the eligibility requirements for the beginning farmer tax credit for the sale or rental of an agricultural asset. The bill proposes increasing the maximum credit available to owners of agricultural assets to $50,000 and amending certain clauses related to rental agreements, family member sales, and credit carryovers. Additionally, the bill seeks to appropriate money for the administration of the credit and to repeal the sunset of the credit.
Missouri Tax Credit for Rural Citizens
SB92, The Missouri Rural Workforce Development Act, would establish a tax credit for investors who make capital investments in rural funds in the state. The tax credit, which is non-refundable but can be carried forward, is equal to a percentage of the capital investment and is available for six years. To qualify, rural funds must apply to the Department of Economic Development and meet certain requirements, such as investing in eligible businesses with fewer than 250 employees and maintaining qualified investments equal to 90% of their capital investment authority. The Department may recapture tax credits if certain conditions are unmet, and rural funds must submit annual reports. After six years, rural funds may apply to exit the program.
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