Indiana 2024 Regular Session

Indiana Senate Bill SB0176 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	Introduced Version
3	3	SENATE BILL No. 176
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3.1-42.
7	7	Synopsis: Tax credit for beginning farmers. Provides an adjusted gross
8	8	income tax credit for owners of agricultural assets who sell or rent
9	9	agricultural assets to a qualified beginning farmer. Defines "qualified
10	10	beginning farmer" and "agricultural assets" for purposes of the credit.
11	11	Allows a taxpayer to apply to the Indiana economic development
12	12	corporation (corporation) for approval and certification of the credit.
13	13	Allows a beginning farmer to apply to the corporation for certification
14	14	as a qualified beginning farmer. Provides that the credit is equal to: (1)
15	15	the lesser of 5% of the sale price or fair market value of the agricultural
16	16	asset or $32,000; or (2) 10% of the gross rental income in each of the
17	17	first, second, and third years of the rental agreement, up to a maximum
18	18	of $7,000 per year. Limits the total amount of tax credits that may be
19	19	awarded in a state fiscal year to: (1) $5,000,000 in state fiscal year
20	20	2024-2025; and (2) $6,000,000 in state fiscal year 2025-2026, and each
21	21	state fiscal year thereafter.
22	22	Effective: January 1, 2025.
23	23	Yoder
24	24	January 9, 2024, read first time and referred to Committee on Tax and Fiscal Policy.
25	25	2024 IN 176—LS 6732/DI 120 Introduced
26	26	Second Regular Session of the 123rd General Assembly (2024)
27	27	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
28	28	Constitution) is being amended, the text of the existing provision will appear in this style type,
29	29	additions will appear in this style type, and deletions will appear in this style type.
30	30	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
31	31	provision adopted), the text of the new provision will appear in this style type. Also, the
32	32	word NEW will appear in that style type in the introductory clause of each SECTION that adds
33	33	a new provision to the Indiana Code or the Indiana Constitution.
34	34	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
35	35	between statutes enacted by the 2023 Regular Session of the General Assembly.
36	36	SENATE BILL No. 176
37	37	A BILL FOR AN ACT to amend the Indiana Code concerning
38	38	taxation.
39	39	Be it enacted by the General Assembly of the State of Indiana:
40	40	1 SECTION 1. IC 6-3.1-42 IS ADDED TO THE INDIANA CODE
41	41	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
42	42	3 JANUARY 1, 2025]:
43	43	4 Chapter 42. Beginning Farmer Tax Credit
44	44	5 Sec. 1. This chapter applies to taxable years beginning after
45	45	6 December 31, 2024.
46	46	7 Sec. 2. As used in this chapter, "agricultural asset" means
47	47	8 agricultural land, livestock, facilities, buildings, and machinery
48	48	9 used for farming.
49	49	10 Sec. 3. As used in this chapter, "agricultural production" means
50	50	11 the production for commercial purposes of crops, livestock, and
51	51	12 livestock products, including the processing or retail marketing of
52	52	13 such crops, livestock, or livestock products if more than fifty
53	53	14 percent (50%) of such processed or merchandised products are
54	54	15 produced by the farm operator. The term includes use of land
55	55	16 which is devoted to and meets the requirements of and
56	56	17 qualifications for payments or other compensation pursuant to a
57	57	2024 IN 176—LS 6732/DI 120 2
58	58	1 soil conservation program under an agreement with an agency of
59	59	2 the federal government.
60	60	3 Sec. 4. As used in this chapter, "corporation" refers to the
61	61	4 Indiana economic development corporation.
62	62	5 Sec. 5. As used in this chapter, "department" refers to the
63	63	6 department of state revenue.
64	64	7 Sec. 6. As used in this chapter, "farm" means real property on
65	65	8 which farming occurs.
66	66	9 Sec. 7. As used in this chapter, "farming" means the active use,
67	67	10 management, and operation of real and personal property for
68	68	11 agricultural production.
69	69	12 Sec. 8. As used in this chapter, "lease" means a written
70	70	13 agreement between parties for the lease of real property on which
71	71	14 farming occurs.
72	72	15 Sec. 9. As used in this chapter, "owner of agricultural assets"
73	73	16 means an individual, trust, or pass through entity that is the owner
74	74	17 in fee of agricultural land or has legal title to any other
75	75	18 agricultural asset. The term does not include an equipment dealer,
76	76	19 livestock dealer, or comparable entity that is engaged in the
77	77	20 business of selling agricultural assets for profit and that is not
78	78	21 engaged in farming as its primary business activity.
79	79	22 Sec. 10. As used in this chapter, "pass through entity" means:
80	80	23 (1) a corporation that is exempt from the adjusted gross
81	81	24 income tax under IC 6-3-2-2.8(2);
82	82	25 (2) a partnership;
83	83	26 (3) a limited liability company; or
84	84	27 (4) a limited liability partnership.
85	85	28 Sec. 11. As used in this chapter, "qualified beginning farmer"
86	86	29 means a person who meets the following criteria:
87	87	30 (1) Has demonstrated experience in the agricultural industry
88	88	31 or related field or has transferable skills as determined by the
89	89	32 corporation.
90	90	33 (2) Has not received federal gross income from agricultural
91	91	34 production for more than the ten (10) most recent taxable
92	92	35 years.
93	93	36 (3) Intends to engage in agricultural production in Indiana
94	94	37 and to provide the majority of labor and management
95	95	38 involved in that agricultural production.
96	96	39 (4) Has obtained written certification from the corporation
97	97	40 confirming beginning farmer status.
98	98	41 (5) Is not, and whose spouse is not, a partner, member,
99	99	42 shareholder, or trustee of the owner of agricultural assets
100	100	2024 IN 176—LS 6732/DI 120 3
101	101	1 from whom the person seeks to purchase or rent agricultural
102	102	2 assets.
103	103	3 Sec. 12. As used in this chapter, "state tax liability" means a
104	104	4 taxpayer's total tax liability incurred under IC 6-3-1 through
105	105	5 IC 6-3-7 (the adjusted gross income tax) as computed after the
106	106	6 application of all credits that under IC 6-3.1-1-2 are to be applied
107	107	7 before the credit provided by this chapter.
108	108	8 Sec. 13. As used in this chapter, "taxpayer" means an individual
109	109	9 or entity that is an owner of agricultural assets and has any state
110	110	10 tax liability.
111	111	11 Sec. 14. (a) A taxpayer is entitled to a credit against the
112	112	12 taxpayer's state tax liability in the taxable year in which the
113	113	13 taxpayer sells or rents agricultural assets to a qualified beginning
114	114	14 farmer who has obtained the certification required under section
115	115	15 15 of this chapter.
116	116	16 (b) The amount of a credit allowed under this chapter is equal
117	117	17 to:
118	118	18 (1) the lesser of:
119	119	19 (A) five percent (5%) of the sale price or fair market value
120	120	20 of the agricultural asset; or
121	121	21 (B) thirty-two thousand dollars ($32,000); or
122	122	22 (2) ten percent (10%) of the gross rental income in each of the
123	123	23 first, second, and third years of the rental agreement, up to a
124	124	24 maximum of seven thousand dollars ($7,000) per year.
125	125	25 Sec. 15. (a) A taxpayer wishing to obtain a credit under this
126	126	26 chapter must apply to the corporation for approval and
127	127	27 certification of the credit in the form and manner prescribed by the
128	128	28 corporation. The application must:
129	129	29 (1) identify the qualified beginning farmer who has been
130	130	30 certified by the corporation under this section and to whom
131	131	31 the agricultural assets are sold or rented;
132	132	32 (2) specify whether the qualified beginning farmer is a
133	133	33 brother, sister, ancestor, or lineal descendant of the applicant;
134	134	34 and
135	135	35 (3) provide all other information required by the corporation.
136	136	36 (b) A person may apply to the corporation for certification as a
137	137	37 qualified beginning farmer for purposes of this chapter. The
138	138	38 application shall be in the form and manner prescribed by the
139	139	39 corporation and shall require that the applicant provide the
140	140	40 following:
141	141	41 (1) Projected earnings statements to demonstrate the profit
142	142	42 potential for the farming conducted by the applicant.
143	143	2024 IN 176—LS 6732/DI 120 4
144	144	1 (2) Verification that the farming conducted by the applicant
145	145	2 will be a significant source of income for the applicant.
146	146	3 (3) Verification that the applicant will, if certified as a
147	147	4 qualified beginning farmer by the corporation, notify the
148	148	5 corporation and the department if the farmer no longer meets
149	149	6 the certification and eligibility requirements within the three
150	150	7 (3) year certification period, in which case eligibility for the
151	151	8 tax credit ends.
152	152	9 (4) Verification that the applicant is not engaged in farming
153	153	10 by means of a joint business venture.
154	154	11 (5) Verification and documentation as necessary to meet other
155	155	12 eligibility requirements as may be established by the
156	156	13 corporation.
157	157	14 (c) The certification of a qualified beginning farmer under
158	158	15 subsection (b) or the certification of a tax credit under subsection
159	159	16 (a) is valid for the year of the certification and the two (2) following
160	160	17 years, after which time the qualified beginning farmer or the
161	161	18 taxpayer must apply to the corporation for recertification under
162	162	19 this section.
163	163	20 Sec. 16. To obtain a credit under this chapter, a taxpayer must
164	164	21 claim the credit on the taxpayer's annual state tax return or
165	165	22 returns in the manner prescribed by the department. The taxpayer
166	166	23 shall submit to the department the certification by the corporation
167	167	24 required under section 15 of this chapter each taxable year in
168	168	25 which the credit is claimed and provide all information that the
169	169	26 department determines is necessary for the calculation of the credit
170	170	27 provided by this chapter.
171	171	28 Sec. 17. If a pass through entity is entitled to a tax credit under
172	172	29 this chapter but does not have state tax liability against which the
173	173	30 tax credit may be applied, a shareholder, partner, or member of
174	174	31 the pass through entity is entitled to a tax credit equal to:
175	175	32 (1) the tax credit determined for the pass through entity for
176	176	33 the taxable year; multiplied by
177	177	34 (2) the percentage of the pass through entity's distributive
178	178	35 income to which the shareholder, partner, or member is
179	179	36 entitled.
180	180	37 Sec. 18. (a) A taxpayer is not entitled to a carryover, carryback,
181	181	38 or refund of any unused credit under this chapter.
182	182	39 (b) A taxpayer may not sell, assign, convey, or otherwise
183	183	40 transfer a tax credit provided under this chapter.
184	184	41 Sec. 19. The total amount of tax credits awarded under this
185	185	42 chapter may not exceed:
186	186	2024 IN 176—LS 6732/DI 120 5
187	187	1 (1) five million dollars ($5,000,000) in the state fiscal year
188	188	2 beginning July 1, 2024, and ending June 30, 2025; and
189	189	3 (2) six million dollars ($6,000,000) in the state fiscal year
190	190	4 beginning July 1, 2025, and ending June 30, 2026, and each
191	191	5 state fiscal year thereafter.
192	192	2024 IN 176—LS 6732/DI 120