Introduced Version
HOUSE BILL No. 1191
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-3.1-42.
Synopsis: Retiring farmers tax credit. Provides an adjusted gross
income tax credit for retired farmers who sell or lease farmland or sell
livestock to a qualified beginning farmer. Defines "qualified beginning
farmer" and "farmland" for purposes of the credit. Allows a taxpayer to
apply to the Indiana state department of agriculture (ISDA) for
approval and certification of the credit. Allows a beginning farmer to
apply to the ISDA for certification as a qualified beginning farmer.
Specifies the amount of the credit that may be claimed by a taxpayer.
Limits the total amount of tax credits that may be awarded to
$1,000,000 per state fiscal year. Sunsets the credit after six years.
Effective: January 1, 2026.
Culp
January 8, 2025, read first time and referred to Committee on Ways and Means.
2025 IN 1191—LS 7049/DI 120 Introduced
First Regular Session of the 124th General Assembly (2025)
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HOUSE BILL No. 1191
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-3.1-42 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026]:
4 Chapter 42. Retiring Farmers Tax Credit
5 Sec. 1. This chapter applies to taxable years beginning after
6 December 31, 2025.
7 Sec. 2. As used in this chapter, "agricultural production" means
8 the production for commercial purposes of crops, livestock, and
9 livestock products, including the processing or retail marketing of
10 such crops, livestock, or livestock products if more than fifty
11 percent (50%) of such processed or marketed products are
12 produced by the farm operator. The term includes use of land that
13 is devoted to and meets the requirements of and qualifications for
14 payments or other compensation pursuant to a soil conservation
15 program under an agreement with an agency of the federal
16 government.
17 Sec. 3. As used in this chapter, "department" refers to the
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1 department of state revenue.
2 Sec. 4. As used in this chapter, "farm" means real property on
3 which farming occurs.
4 Sec. 5. As used in this chapter, "farming" means the active use,
5 management, and operation of real property for agricultural
6 production.
7 Sec. 6. As used in this chapter, "farmland" means agricultural
8 land, facilities, buildings, equipment, and machinery used for
9 farming.
10 Sec. 7. As used in this chapter, "ISDA" refers to the Indiana
11 state department of agriculture.
12 Sec. 8. As used in this chapter, "owner of farmland" means an
13 individual, trust, or pass through entity that is the owner in fee of
14 farmland.
15 Sec. 9. As used in this chapter, "pass through entity" means:
16 (1) a corporation that is exempt from the adjusted gross
17 income tax under IC 6-3-2-2.8(2);
18 (2) a partnership;
19 (3) a limited liability company; or
20 (4) a limited liability partnership.
21 Sec. 10. As used in this chapter, "qualified beginning farmer"
22 means a person who meets the following criteria:
23 (1) Has demonstrated experience in the agricultural industry
24 or related field or has transferable skills as determined by the
25 ISDA.
26 (2) Has not received federal gross income from agricultural
27 production for more than the ten (10) most recent taxable
28 years.
29 (3) Intends to engage in agricultural production in Indiana
30 and to provide the majority of labor and management
31 involved in that agricultural production.
32 (4) Has obtained written certification from the ISDA
33 confirming beginning farmer status.
34 Sec. 11. As used in this chapter, "qualified retired farmer"
35 means an owner of farmland or livestock who retires from farming
36 the owner's land and is either at least sixty (60) years of age or
37 retires due to disability.
38 Sec. 12. As used in this chapter, "state tax liability" means a
39 taxpayer's total tax liability incurred under IC 6-3-1 through
40 IC 6-3-7 (the adjusted gross income tax) as computed after the
41 application of all credits that under IC 6-3.1-1-2 are to be applied
42 before the credit provided by this chapter.
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1 Sec. 13. As used in this chapter, "taxpayer" means a qualified
2 retired farmer who has any state tax liability.
3 Sec. 14. (a) Subject to subsection (c), a taxpayer is entitled to a
4 credit against the taxpayer's state tax liability in the taxable year
5 in which the taxpayer sells or leases farmland or sells livestock to
6 a qualified beginning farmer who has obtained the certification
7 required under section 15 of this chapter.
8 (b) The amount of a credit allowed under this chapter is equal
9 to:
10 (1) in the case of farmland, either or both:
11 (A) the lesser of:
12 (i) five percent (5%) of the sale price of the farmland; or
13 (ii) forty-eight thousand dollars ($48,000); and
14 (B) either:
15 (i) fifteen percent (15%) of the gross rental income in the
16 first year of the lease agreement, if the lease agreement
17 is not a crop share lease; or
18 (ii) forty-five dollars ($45) per acre of farmland that is
19 leased under a lease agreement that is a crop share lease;
20 up to a maximum of twenty-five thousand dollars
21 ($25,000); and
22 (2) in the case of livestock, ten percent (10%) of the fair
23 market value of the livestock;
24 not to exceed a combined total of sixty-five thousand dollars
25 ($65,000).
26 (c) To be eligible for a credit under this chapter the taxpayer
27 and the qualified beginning farmer must enter into an agreement
28 in which the qualified beginning farmer agrees to lease the
29 farmland for not less than three (3) years in the case of a lease, or
30 agrees to hold the farmland as owner for at least three (3) years in
31 the case of a sale.
32 (d) If the department determines that a qualified beginning
33 farmer either terminated the lease with the taxpayer or
34 relinquished ownership of the farmland (whichever is applicable)
35 before the expiration of three (3) years, the department shall give
36 notice to the taxpayer and impose an assessment on the taxpayer
37 in an amount equal to the previously allowed credits plus any
38 interest and penalties required or permitted by law.
39 (e) If the owner of farmland is a trust or pass through entity,
40 only those owners of the entity who are qualified retired farmers
41 are entitled to a credit under this chapter in proportion to the
42 taxpayer's beneficial interest in the entity.
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1 (f) In the case of a husband and wife who are both taxpayers
2 and who file separate tax returns, the husband and wife are
3 entitled to only one (1) credit under this chapter and may take the
4 credit in equal shares or one (1) spouse may take the whole credit.
5 (g) In the case of two (2) or more taxpayers who are the owners
6 of farmland as joint tenants or tenants in common, the owners are
7 entitled to only one (1) credit under this chapter in proportion as
8 set forth in section 17 of this chapter.
9 Sec. 15. (a) A taxpayer wishing to obtain a credit under this
10 chapter must apply to the ISDA for approval and certification of
11 the credit in the form and manner prescribed by the ISDA. The
12 application must:
13 (1) identify the qualified beginning farmer who has been
14 certified by the ISDA under this section and to whom the
15 farmland is sold or leased or the livestock is sold; and
16 (2) provide all other information required by the ISDA.
17 (b) A person may apply to the ISDA for certification as a
18 qualified beginning farmer for purposes of this chapter. The
19 application shall be in the form and manner prescribed by the
20 ISDA and shall require that the applicant provide the following:
21 (1) Projected earnings statements to demonstrate the profit
22 potential for the farming conducted by the applicant.
23 (2) Verification that the farming conducted by the applicant
24 will be a significant source of income for the applicant.
25 (3) Verification that the applicant will, if certified as a
26 qualified beginning farmer by the ISDA, notify the ISDA and
27 the department if the farmer no longer meets the certification
28 and eligibility requirements within the three (3) year
29 certification period, in which case eligibility for the tax credit
30 ends.
31 (4) Verification and documentation as necessary to meet other
32 eligibility requirements as may be established by the ISDA.
33 (c) The certification of a qualified beginning farmer under
34 subsection (b) or the certification of a tax credit under subsection
35 (a) is valid for the year of the certification and the two (2) following
36 years, after which time the qualified beginning farmer or the
37 taxpayer must apply to the ISDA for recertification under this
38 section.
39 Sec. 16. To obtain a credit under this chapter, a taxpayer must
40 claim the credit on the taxpayer's annual state tax return or
41 returns in the manner prescribed by the department. The taxpayer
42 shall submit to the department the certification by the ISDA
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1 required under section 15 of this chapter for the taxable year in
2 which the credit is claimed and provide all information that the
3 department determines is necessary for the calculation of the credit
4 provided by this chapter.
5 Sec. 17. If a pass through entity is entitled to a tax credit under
6 this chapter but does not have state tax liability against which the
7 tax credit may be applied, a shareholder, partner, or member of
8 the pass through entity is entitled to a tax credit equal to:
9 (1) the tax credit determined for the pass through entity for
10 the taxable year; multiplied by
11 (2) the percentage of the pass through entity's distributive
12 income to which the shareholder, partner, or member is
13 entitled.
14 Sec. 18. (a) The credit provided by this chapter may be carried
15 forward and applied to succeeding taxable years for three (3)
16 taxable years following the unused credit year. A taxpayer is not
17 entitled to any carryback or refund of any unused credit.
18 (b) A taxpayer may not sell, assign, convey, or otherwise
19 transfer a tax credit provided under this chapter.
20 Sec. 19. The total amount of tax credits awarded under this
21 chapter may not exceed one million dollars ($1,000,000) per state
22 fiscal year.
23 Sec. 20. This chapter expires January 1, 2032.
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