Pennsylvania Governor Wolf’s Administration announced the availability of $59 million in Beginning Farmer Tax Credits over the next decade for those who sell or rent agricultural land, livestock, equipment, buildings or other assets to qualified beginning farmers.
“Pennsylvania’s $135.7 billion agriculture industry feeds our economy and feeds our world,” said Agriculture Secretary Russell Redding. “With our average farmer being 59 years old, we can’t grow and thrive without attracting new leaders to feed us in the future. These tax credits will combine with PA Farm Bill investments to provide incentives to current farmers and tear down barriers faced by aspiring farmers.”
The Beginning Farmer Tax Credit Program was established under the Pennsylvania Tax Code to provide tax credits to those who sell or rent agricultural assets to beginning farmers.
“The program provides a benefit to landowners who help new farmers get started,” said Senator Elder Vogel (R- Beaver, Butler, Lawrence), chairman of the Senate Agriculture & Rural Affairs Committee. “We know that the number one concern facing them is finding affordable farmland. None of our neighboring states offer a similar tax credit program, so this is a great way to show that Pennsylvania is serious about preserving its agricultural legacy.”
The Pennsylvania Department of Community and Economic Development, in consultation with the Pennsylvania Departments of Agriculture and Revenue, will allocate up to $5 million in tax year 2020, and up to $6 million annually through the 2030 tax year, for credits of five percent of the lesser of the sale price of fair market value of the agricultural asset, up to $32,000; or 10 percent of the gross rental income of the first, second and third year of the rental agreement, up to $7,000 per year.
“Pennsylvania runs on agriculture, both through the fresh food it puts on our plates and the economic activity that it generates,” said DCED Secretary Dennis Davin. “The Beginning Farmer Tax Credit Program ensures that today’s agribusinesses will continue to grow and thrive in the next generation and ensures that our communities and local economies will continue to benefit from this critical industry.”
Beginning farmers must meet eligibility criteria, including intent to farm in Pennsylvania, and provide the majority of the labor and management, related experience or transferable skills, and no federal gross income from agricultural production in the past 10 years. Applications for beginning farmer certification, which are evaluated by the Department of Agriculture, along with detailed eligibility criteria, can be found on the department’s website, agriculture.pa.gov. Beginning farmer certification is also required for the Realty Transfer Tax Exemption for owners of preserved farms who transfer ownership to new farmers, an incentive available under the PA Farm Bill.
Asset owners can apply for tax credits through DCED’s electronic single application at esa.dced.state.pa.us. Complete program guidelines and application instructions can be found on DCED’s website, dced.pa.gov.
Farmers can combine tax credits with other funding, including PA Farm Bill resources available through the new Ag Business Development Center to create business plans to enhance economic viability; transition ownership and operation of a farm to new owners and operators; expand or diversify their operations to reach new markets and increase profitability.