LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6732 NOTE PREPARED: Dec 28, 2023
BILL NUMBER: SB 176 BILL AMENDED:
SUBJECT: Tax Credit for Beginning Farmers.
FIRST AUTHOR: Sen. Yoder BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State
DEDICATED
FEDERAL
Summary of Legislation: The bill provides an adjusted gross income tax credit for owners of agricultural
assets who sell or rent agricultural assets to a qualified beginning farmer. It defines "qualified beginning
farmer" and "agricultural assets" for purposes of the credit. The bill allows a taxpayer to apply to the Indiana
Economic Development Corporation (IEDC) for approval and certification of the credit. It allows a beginning
farmer to apply to the IEDC for certification as a qualified beginning farmer.
The bill provides that the credit is equal to:
(1) the lesser of 5% of the sale price or fair market value of the agricultural asset or $32,000; or
(2) 10% of the gross rental income in each of the first, second, and third years of the rental
agreement, up to a maximum of $7,000 per year.
The bill limits the total amount of tax credits that may be awarded in a state fiscal year to:
(1) $5 M in FY 2025; and
(2) $6 M in FY 2026, and each state fiscal year thereafter.
Effective Date: January 1, 2025.
Explanation of State Expenditures: Department of State Revenue (DOR): The DOR will incur additional
expenses to revise tax forms, instructions, and computer programs to reflect the changes made by the bill.
The DOR's current level of resources should be sufficient to implement these changes.
IEDC: The bill will increase workload for the IEDC to approve qualified beginning farmers and certify the
credits. The IEDC’s current staff and resources should be sufficient to implement the bill.
SB 176 1 Explanation of State Revenues: Tax Credit: The bill establishes a nonrefundable Adjusted Gross Income
(AGI) tax credit for taxpayers who sell or rent property or equipment to beginning farmers. The tax credit
is effective beginning in tax year 2025. Based on claims amounts from an identical tax credit provided in
Pennsylvania, the provision may decrease General Fund revenue by around $200,000 or less annually
beginning in FY 2026.
The amount of the tax credit is equal to 5% of the sale price or fair market value of agricultural assets up to
$32,000 annually, or 10% of gross rental income for the first three years up to $7,000 per year up to the
taxpayer’s income tax liability. The tax credit cannot be carried forward, carried backward, or refunded. The
total amount of tax credits awarded may not exceed $5 M in FY 2025 and $6 M in FY 2026 and thereafter.
Additional Information - This tax credit, award amounts, and annual credit limits are the same as a tax credit
for beginning farmers in Pennsylvania that became law in 2019 (2019 Act 65). In 2020-2021, Pennsylvania
awarded $200,000 in the tax credit. In 2021-2022, the tax credit award amount was nominal. Pennsylvania’s
2023 list of certified beginning farmers lists 53 farmers. Based on farming statistics reported by the U.S.
Department of Agriculture, there were 56,000 farms in Indiana and 52,700 farms in Pennsylvania in 2019.
Explanation of Local Expenditures:
Explanation of Local Revenues:
State Agencies Affected: Department of State Revenue, Indiana Economic Development Corporation.
Local Agencies Affected:
Information Sources: Commonwealth of Pennsylvania. Executive Budget, 2022-2023.
https://www.budget.pa.gov/Publications%20and%20Reports/Documents/OtherPublications/Budget%20B
ook%202022-23_Web%20Version.Updated.pdf;
Commonwealth of Pennsylvania. Executive Budget, 2023-2024.
https://www.budget.pa.gov/Publications%20and%20Reports/CommonwealthBudget/Documents/2023-24
%20Budget%20Documents/Budget%20Book%202023-24%20WEB%20V.5.04182023.pdf;
U.S. Department of Agriculture. (2021). Agricultural Statisics. Table 9-6.–Number of farms and land in
farms by State and United States, 2018-2019.
https://downloads.usda.library.cornell.edu/usda-esmis/files/j3860694x/gq67m183k/np194m208/2021_Ag
ricultural_Statistics_Book.pdf;
https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2019&sessInd=0&act=65
Fiscal Analyst: Camille Tesch, 317-232-5293.
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