Iowa’s beginning farmer tax credit program is still in business, but a lack of action by the legislature last year means it isn’t taking any new applications at the moment.
The program offers tax credits to landowners and beginning farmers under certain circumstances, essentially encouraging landowners to rent to beginning farmers.
But legislation passed in 2013 that increased the cap on funding and increased credit percentages on contracts sunsetted on Jan. 1, 2018, and the program is bumping up against its funding cap.
As some of the multi-year beginning farmer tax credit contracts expire next year, more cap space will be available, according to Lori Beary, chief community development office for the Iowa Finance Authority, which implements the program.
Meanwhile, legislators are looking at a bill that would increase the cap again, according to Iowa House Agriculture Committee Chair Lee Hein, R-Monticello.
“I think what we’re going to try to do is reintroduce a majority of the stuff we tried to do in 2013,” Hein said.
House File 495 is working its way through the committee process right now, but Hein said that bill could see changes before it reaches any vote in the legislature.
The beginning farmer tax credit program was created in 2009. The legislature at that time placed a cap of $6 million on the value of the credits that could be awarded. The program at that time put the tax credit at 5 percent for a cash rent contract and 15 percent for a crop-share contract.
The 2013 legislation doubled the cap to $12 million, increased the cash rent total to 7 percent and the crop share total to 17 percent. It also gave an additional 1 percent for leasing to a veteran and created a custom farming tax credit. But that legislation expired Jan. 1.
Because there are already more than $6 million in tax credits for calendar year 2018, no new applications are being accepted for this year. Approximately $2 million of that total should expire at the end of 2018, so the state would then be able to accept some new applications.
Hein said legislation was introduced last year to deal with the situation, but the proposals were not passed. He is hopeful something will be passed this year, but adds it is likely any new legislation will include some changes from the 2013 legislation. For example, he said it is possible that the cap may be raised, but only to $8 or $9 million instead of $12 million.
Iowa Secretary of Agriculture Bill Northey said he hopes lawmakers can pass a bill that would keep the program going and would implement much of what was done in 2013.
“We certainly extend our support of the program,” he said of the Department of Agriculture and Land Stewardship.