Beginning Farmer Tax Deduction Program Set to Launch…

JEFFERSON CITY -

The Missouri Agricultural and Small Business Development Authority (MASBDA) will begin accepting applications for a new program supporting beginning farmers in Missouri starting Aug. 1.

A farm owner may qualify for a deduction from their Missouri adjusted gross income based on the income received by either selling or renting/leasing farmland to a beginning farmer.

"This program is the perfect complement to our existing Beginning Farmer loan program," said Jill Wood, Executive Director of MASBDA. "Our Beginning Farmer Loan program enables local lenders to provide lower interest rates on loans to beginning farmers purchasing farmland. While the two programs operate independently of each other, both are beneficial to landowners and beginning farmers."

A farm owner who sold farmland to a beginning farmer on, or after, Aug. 28, 2023, may subtract from their Missouri adjusted gross income, to the extent included in federal adjusted gross income, an amount equal to the portion of capital gains received from the sale of the farmland according to the following:

Capital Gain Amount: Percentage of Capital Gains Subtraction:

$0 - $2 million 100%

$2,000,001 - $3,000,000 80%

$3,000,001 - $4,000,000 60%

$4,000,001 - $5,000,000 40%

$5,000,001 - $6,000,000 20%

A farm owner who rents, leases or enters into a crop-share arrangement (not exceeding 10 years) with a qualified beginning farmer may also qualify for a deduction to their Missouri adjusted gross income. This deduction will be equal to the amount of annual income received by the farm owner under the agreement, to the extent included in federal adjusted gross income, up to $25,000 per tax year.

"The creation and passage of this program is the result of our state commodity organizations working together to support the transition of farmland in Missouri to the next generation," said Director of Agriculture Chris Chinn. "This program is an incentive for a landowner to sell or lease their land to a beginning farmer who will keep the land in production, rather than dividing the land into smaller tracts for housing or commercial development."

Once MASBDA verifies both the farm owner and beginning farmer meet the requirements of the program, a dated certification letter will be provided to the farm owner. The beginning farmer and the Missouri Department of Revenue will also be provided a copy of the certification. To receive the deduction, it is the responsibility of the farm owner to provide the certification to the Missouri Department of Revenue when filing their tax return, using Form MO-5955. For transactions that took place in tax year 2023, the farm owner may have to file an amended return to utilize the deduction.

For program information and an application, visit masbda.com or contact the Missouri Agricultural and Small Business Development Authority at (573) 751-2129 or [email protected].

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