2018 Ushers in Cuts to Iowa Beginning Farmer Tax Credit Program

December 21, 2017
Kristine A. Tidgren

We told you last April about changes that would come to the Iowa Beginning Farmer Tax Credit program in 2018, absent legislation. Because those legislative changes did not occur, cuts to the program are now being felt by beginning farmers and landlords around Iowa.

In 2009, the Iowa Legislature placed a cap of $6 million on the value of beginning farmer credits that could be awarded in Iowa. When it created the custom farming contract tax credit (CFTC) in 2013, the Legislature increased this cap to $12 million, $8 million of which was allotted to credits for leasing land, machinery and breeding livestock, and $4 million of which was allotted to the CFTC. The 2013 legislation also raised the percentages of available credits. The 2013 provisions expire on January 1, 2018. This means the following changes kick in January 1, 2018:

  • The allocation for Beginning Farmer Tax Credits is reduced from $12 million to $6 million
  • The custom farming contract tax credit is eliminated
  • The tax credit for cash rent leases decreases from 7% to 5% and the credit for crop share leases decreases from 17% to 15%
  • The additional 1% credit for leasing to a beginning farmer who is a veteran is eliminated

The Iowa Finance Authority has stated that there are currently more than $6 million in tax credits approved to carry over into 2018. This means that they are no longer able to accept any new applications in 2018. They anticipate having about $2 million of credits to allocate in 2019, if no legislation intervenes.  Stay tuned for further information on these applications.

Several bills were introduced in the Legislature last year, but they did not see a vote. Persons concerned about the cuts to this credit should contact their legislators. The Iowa Finance Authority Beginning Farmer Tax Credit web page is here.

 

CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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