The Beginning Farmer Tax Incentive Act provides tax breaks for people selling farmland to or leasing farmland to beginning farmers. Sellers of qualifying farmland can exclude 40 percent of their capital gains from taxable income, up to $1.5 million per year (with a cumulative lifetime limit of $1.5 million), and landowners who lease farmland to beginning farmers for up to 10 years can exclude up to $25,000 in annual rental income. A "beginning farmer" is defined as a U.S. citizen certified by the Department of Agriculture who has 1-10 years of farming experience, qualifies for a Farm Service Agency loan, operates a new farm, or is a family member within the fourth degree of relation to the landowner. The tax benefits apply to farmland the owner or family has held for at least five of the past eight years while actively farming it, though taxes must be repaid on a sliding scale if the land stops being used for farming within five years after the sale. The Treasury Department must submit annual reports to Congress tracking the program's costs and usage.
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