Indiana 2025 Regular Session

Indiana House Bill HB1191 Compare Versions

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

Old	New	Differences
1	1
2	2	Introduced Version
3	3	HOUSE BILL No. 1191
4	4	_____
5	5	DIGEST OF INTRODUCED BILL
6	6	Citations Affected: IC 6-3.1-42.
7	7	Synopsis: Retiring farmers tax credit. Provides an adjusted gross
8	8	income tax credit for retired farmers who sell or lease farmland or sell
9	9	livestock to a qualified beginning farmer. Defines "qualified beginning
10	10	farmer" and "farmland" for purposes of the credit. Allows a taxpayer to
11	11	apply to the Indiana state department of agriculture (ISDA) for
12	12	approval and certification of the credit. Allows a beginning farmer to
13	13	apply to the ISDA for certification as a qualified beginning farmer.
14	14	Specifies the amount of the credit that may be claimed by a taxpayer.
15	15	Limits the total amount of tax credits that may be awarded to
16	16	$1,000,000 per state fiscal year. Sunsets the credit after six years.
17	17	Effective: January 1, 2026.
18	18	Culp
19	19	January 8, 2025, read first time and referred to Committee on Ways and Means.
20	20	2025 IN 1191—LS 7049/DI 120 Introduced
21	21	First Regular Session of the 124th General Assembly (2025)
22	22	PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
23	23	Constitution) is being amended, the text of the existing provision will appear in this style type,
24	24	additions will appear in this style type, and deletions will appear in this style type.
25	25	Additions: Whenever a new statutory provision is being enacted (or a new constitutional
26	26	provision adopted), the text of the new provision will appear in this style type. Also, the
27	27	word NEW will appear in that style type in the introductory clause of each SECTION that adds
28	28	a new provision to the Indiana Code or the Indiana Constitution.
29	29	Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
30	30	between statutes enacted by the 2024 Regular Session of the General Assembly.
31	31	HOUSE BILL No. 1191
32	32	A BILL FOR AN ACT to amend the Indiana Code concerning
33	33	taxation.
34	34	Be it enacted by the General Assembly of the State of Indiana:
35	35	1 SECTION 1. IC 6-3.1-42 IS ADDED TO THE INDIANA CODE
36	36	2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
37	37	3 JANUARY 1, 2026]:
38	38	4 Chapter 42. Retiring Farmers Tax Credit
39	39	5 Sec. 1. This chapter applies to taxable years beginning after
40	40	6 December 31, 2025.
41	41	7 Sec. 2. As used in this chapter, "agricultural production" means
42	42	8 the production for commercial purposes of crops, livestock, and
43	43	9 livestock products, including the processing or retail marketing of
44	44	10 such crops, livestock, or livestock products if more than fifty
45	45	11 percent (50%) of such processed or marketed products are
46	46	12 produced by the farm operator. The term includes use of land that
47	47	13 is devoted to and meets the requirements of and qualifications for
48	48	14 payments or other compensation pursuant to a soil conservation
49	49	15 program under an agreement with an agency of the federal
50	50	16 government.
51	51	17 Sec. 3. As used in this chapter, "department" refers to the
52	52	2025 IN 1191—LS 7049/DI 120 2
53	53	1 department of state revenue.
54	54	2 Sec. 4. As used in this chapter, "farm" means real property on
55	55	3 which farming occurs.
56	56	4 Sec. 5. As used in this chapter, "farming" means the active use,
57	57	5 management, and operation of real property for agricultural
58	58	6 production.
59	59	7 Sec. 6. As used in this chapter, "farmland" means agricultural
60	60	8 land, facilities, buildings, equipment, and machinery used for
61	61	9 farming.
62	62	10 Sec. 7. As used in this chapter, "ISDA" refers to the Indiana
63	63	11 state department of agriculture.
64	64	12 Sec. 8. As used in this chapter, "owner of farmland" means an
65	65	13 individual, trust, or pass through entity that is the owner in fee of
66	66	14 farmland.
67	67	15 Sec. 9. As used in this chapter, "pass through entity" means:
68	68	16 (1) a corporation that is exempt from the adjusted gross
69	69	17 income tax under IC 6-3-2-2.8(2);
70	70	18 (2) a partnership;
71	71	19 (3) a limited liability company; or
72	72	20 (4) a limited liability partnership.
73	73	21 Sec. 10. As used in this chapter, "qualified beginning farmer"
74	74	22 means a person who meets the following criteria:
75	75	23 (1) Has demonstrated experience in the agricultural industry
76	76	24 or related field or has transferable skills as determined by the
77	77	25 ISDA.
78	78	26 (2) Has not received federal gross income from agricultural
79	79	27 production for more than the ten (10) most recent taxable
80	80	28 years.
81	81	29 (3) Intends to engage in agricultural production in Indiana
82	82	30 and to provide the majority of labor and management
83	83	31 involved in that agricultural production.
84	84	32 (4) Has obtained written certification from the ISDA
85	85	33 confirming beginning farmer status.
86	86	34 Sec. 11. As used in this chapter, "qualified retired farmer"
87	87	35 means an owner of farmland or livestock who retires from farming
88	88	36 the owner's land and is either at least sixty (60) years of age or
89	89	37 retires due to disability.
90	90	38 Sec. 12. As used in this chapter, "state tax liability" means a
91	91	39 taxpayer's total tax liability incurred under IC 6-3-1 through
92	92	40 IC 6-3-7 (the adjusted gross income tax) as computed after the
93	93	41 application of all credits that under IC 6-3.1-1-2 are to be applied
94	94	42 before the credit provided by this chapter.
95	95	2025 IN 1191—LS 7049/DI 120 3
96	96	1 Sec. 13. As used in this chapter, "taxpayer" means a qualified
97	97	2 retired farmer who has any state tax liability.
98	98	3 Sec. 14. (a) Subject to subsection (c), a taxpayer is entitled to a
99	99	4 credit against the taxpayer's state tax liability in the taxable year
100	100	5 in which the taxpayer sells or leases farmland or sells livestock to
101	101	6 a qualified beginning farmer who has obtained the certification
102	102	7 required under section 15 of this chapter.
103	103	8 (b) The amount of a credit allowed under this chapter is equal
104	104	9 to:
105	105	10 (1) in the case of farmland, either or both:
106	106	11 (A) the lesser of:
107	107	12 (i) five percent (5%) of the sale price of the farmland; or
108	108	13 (ii) forty-eight thousand dollars ($48,000); and
109	109	14 (B) either:
110	110	15 (i) fifteen percent (15%) of the gross rental income in the
111	111	16 first year of the lease agreement, if the lease agreement
112	112	17 is not a crop share lease; or
113	113	18 (ii) forty-five dollars ($45) per acre of farmland that is
114	114	19 leased under a lease agreement that is a crop share lease;
115	115	20 up to a maximum of twenty-five thousand dollars
116	116	21 ($25,000); and
117	117	22 (2) in the case of livestock, ten percent (10%) of the fair
118	118	23 market value of the livestock;
119	119	24 not to exceed a combined total of sixty-five thousand dollars
120	120	25 ($65,000).
121	121	26 (c) To be eligible for a credit under this chapter the taxpayer
122	122	27 and the qualified beginning farmer must enter into an agreement
123	123	28 in which the qualified beginning farmer agrees to lease the
124	124	29 farmland for not less than three (3) years in the case of a lease, or
125	125	30 agrees to hold the farmland as owner for at least three (3) years in
126	126	31 the case of a sale.
127	127	32 (d) If the department determines that a qualified beginning
128	128	33 farmer either terminated the lease with the taxpayer or
129	129	34 relinquished ownership of the farmland (whichever is applicable)
130	130	35 before the expiration of three (3) years, the department shall give
131	131	36 notice to the taxpayer and impose an assessment on the taxpayer
132	132	37 in an amount equal to the previously allowed credits plus any
133	133	38 interest and penalties required or permitted by law.
134	134	39 (e) If the owner of farmland is a trust or pass through entity,
135	135	40 only those owners of the entity who are qualified retired farmers
136	136	41 are entitled to a credit under this chapter in proportion to the
137	137	42 taxpayer's beneficial interest in the entity.
138	138	2025 IN 1191—LS 7049/DI 120 4
139	139	1 (f) In the case of a husband and wife who are both taxpayers
140	140	2 and who file separate tax returns, the husband and wife are
141	141	3 entitled to only one (1) credit under this chapter and may take the
142	142	4 credit in equal shares or one (1) spouse may take the whole credit.
143	143	5 (g) In the case of two (2) or more taxpayers who are the owners
144	144	6 of farmland as joint tenants or tenants in common, the owners are
145	145	7 entitled to only one (1) credit under this chapter in proportion as
146	146	8 set forth in section 17 of this chapter.
147	147	9 Sec. 15. (a) A taxpayer wishing to obtain a credit under this
148	148	10 chapter must apply to the ISDA for approval and certification of
149	149	11 the credit in the form and manner prescribed by the ISDA. The
150	150	12 application must:
151	151	13 (1) identify the qualified beginning farmer who has been
152	152	14 certified by the ISDA under this section and to whom the
153	153	15 farmland is sold or leased or the livestock is sold; and
154	154	16 (2) provide all other information required by the ISDA.
155	155	17 (b) A person may apply to the ISDA for certification as a
156	156	18 qualified beginning farmer for purposes of this chapter. The
157	157	19 application shall be in the form and manner prescribed by the
158	158	20 ISDA and shall require that the applicant provide the following:
159	159	21 (1) Projected earnings statements to demonstrate the profit
160	160	22 potential for the farming conducted by the applicant.
161	161	23 (2) Verification that the farming conducted by the applicant
162	162	24 will be a significant source of income for the applicant.
163	163	25 (3) Verification that the applicant will, if certified as a
164	164	26 qualified beginning farmer by the ISDA, notify the ISDA and
165	165	27 the department if the farmer no longer meets the certification
166	166	28 and eligibility requirements within the three (3) year
167	167	29 certification period, in which case eligibility for the tax credit
168	168	30 ends.
169	169	31 (4) Verification and documentation as necessary to meet other
170	170	32 eligibility requirements as may be established by the ISDA.
171	171	33 (c) The certification of a qualified beginning farmer under
172	172	34 subsection (b) or the certification of a tax credit under subsection
173	173	35 (a) is valid for the year of the certification and the two (2) following
174	174	36 years, after which time the qualified beginning farmer or the
175	175	37 taxpayer must apply to the ISDA for recertification under this
176	176	38 section.
177	177	39 Sec. 16. To obtain a credit under this chapter, a taxpayer must
178	178	40 claim the credit on the taxpayer's annual state tax return or
179	179	41 returns in the manner prescribed by the department. The taxpayer
180	180	42 shall submit to the department the certification by the ISDA
181	181	2025 IN 1191—LS 7049/DI 120 5
182	182	1 required under section 15 of this chapter for the taxable year in
183	183	2 which the credit is claimed and provide all information that the
184	184	3 department determines is necessary for the calculation of the credit
185	185	4 provided by this chapter.
186	186	5 Sec. 17. If a pass through entity is entitled to a tax credit under
187	187	6 this chapter but does not have state tax liability against which the
188	188	7 tax credit may be applied, a shareholder, partner, or member of
189	189	8 the pass through entity is entitled to a tax credit equal to:
190	190	9 (1) the tax credit determined for the pass through entity for
191	191	10 the taxable year; multiplied by
192	192	11 (2) the percentage of the pass through entity's distributive
193	193	12 income to which the shareholder, partner, or member is
194	194	13 entitled.
195	195	14 Sec. 18. (a) The credit provided by this chapter may be carried
196	196	15 forward and applied to succeeding taxable years for three (3)
197	197	16 taxable years following the unused credit year. A taxpayer is not
198	198	17 entitled to any carryback or refund of any unused credit.
199	199	18 (b) A taxpayer may not sell, assign, convey, or otherwise
200	200	19 transfer a tax credit provided under this chapter.
201	201	20 Sec. 19. The total amount of tax credits awarded under this
202	202	21 chapter may not exceed one million dollars ($1,000,000) per state
203	203	22 fiscal year.
204	204	23 Sec. 20. This chapter expires January 1, 2032.
205	205	2025 IN 1191—LS 7049/DI 120