The House has on its debate calendar HF 768, a bill that would help out new farmers. It is a tax credit program that incentivizes Iowa landowners to rent land to beginning farmers by issuing tax credits to the landowner to offset their individual or corporate tax liability. The program was first enacted in 2006, with an initial tax credit cap of $6 million annually. It was revised in 2013 when the cap was raised to $12 million. This later law had a program sunset in 2017, when the cap dropped back to $6 million annually.
The current legislation modifies the agricultural assets transfer tax credit, creating the beginning farmer tax credit. The program will be administered by the agricultural development board at the Iowa Finance Authority. A beginning farmer would acquire or lease land in exchange for a tax credit for the landowner. Eligibility requirements include the beginning farmer have sufficient education, training and experience in farming, be a resident of Iowa and have access to adequate working capital and productions items. In addition, the participant must materially and substantially participate in the operation, and must have owned or operated a farm business for fewer than 10 years at the time of application.
The agreement must be for at least two years but not more than five. It can be extended by the same terms if both sides agree. The assets can’t be leased or rented at a rate substantially higher or lower than the market rate.
The board will award the credits on a first come first serve basis until the limit is reached. The credit is not transferable or refundable; if the credit exceeds the taxpayer’s liability, it can be carried forward for 10 years or until the credit is depleted, whichever is earlier. The tax credit will be calculated based on whether the agreement was on a cash rent basis, commodity share or crop share, with different calculations for each credit. The credit also allows for special risk-sharing agreements where the parties to the contract adjust the rent based on future events such as crop yield. The tax credit cannot exceed $50,000 in any tax year.
This gives our future farmers the opportunity to take advantage of additional funds to help them in startup costs so they can enjoy the proud traditions of farming in Iowa.
Bill update HF 775 — I've continued hearing concerns from constituents and city and county officials who express reservations about the implications of this legislation that would curtail the ability of local governments to generate and keep revenue in reserve for basic needs. The bill is complex with many moving parts, but takes away local control and flexibility from cities and counties at a time when many are financially stressed. But with the state having severely cut back on aid to local governments in recent years, they are faced with an increasingly impossible bind. Concerns of unfunded mandates imposed by the state severely impacts the budgets of our cities and counties. I hope we are not balancing our state budget off the backs of the cities and counties. As this bill continues to develop we will see if this is beneficial to our constituents or just shifting costs.