1.1 A bill for an act
1.2 relating to taxation; individual income; eliminating the cap on the available amount
1.3 of the credit for owners of agricultural assets; amending Minnesota Statutes 2024,
1.4 sections 41B.0391, subdivisions 2, 4; 290.06, subdivision 37.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2024, section 41B.0391, subdivision 2, is amended to read:
1.7 Subd. 2.Tax credit for owners of agricultural assets.(a) An owner of agricultural
1.8assets may take a credit against the tax due under chapter 290 for the sale or rental of
1.9agricultural assets to a beginning farmer in the amount allocated by the authority under
1.10subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:
1.11 (1) eight percent of the lesser of the sale price or the fair market value of the agricultural
1.12asset, up to a maximum of $50,000;
1.13 (2) ten percent of the gross rental income in each of the first, second, and third years of
1.14a rental agreement, up to a maximum of $7,000 per year; or
1.15 (3) 15 percent of the cash equivalent of the gross rental income in each of the first,
1.16second, and third years of a share rent agreement, up to a maximum of $10,000 per year.
1.17 (b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
1.18agreement. The agricultural asset must be rented at prevailing community rates as determined
1.19by the authority.
1.20 (c) The credit may be claimed only after approval and certification by the authority, and
1.21is limited to the amount stated on the certificate issued under subdivision 4. An owner of
1Section 1.
REVISOR EAP/VJ 25-0228301/29/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1626
NINETY-FOURTH SESSION
Authored by Vang; Anderson, P. H.; Nelson; Hansen, R.; Lawrence and others02/26/2025
The bill was read for the first time and referred to the Committee on Taxes 2.1agricultural assets must apply to the authority for certification and allocation of a credit, in
2.2a form and manner prescribed by the authority.
2.3 (d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
2.4including a share rent agreement, for reasonable cause upon approval of the authority. If a
2.5rental agreement is terminated without the fault of the owner of agricultural assets, the tax
2.6credits shall not be retroactively disallowed. In determining reasonable cause, the authority
2.7must look at which party was at fault in the termination of the agreement. If the authority
2.8determines the owner of agricultural assets did not have reasonable cause, the owner of
2.9agricultural assets must repay all credits received as a result of the rental agreement to the
2.10commissioner of revenue. The repayment is additional income tax for the taxable year in
2.11which the authority makes its decision or when a final adjudication under subdivision 5,
2.12paragraph (a), is made, whichever is later.
2.13 (e) The credit is limited to the liability for tax as computed under chapter 290 for the
2.14taxable year. If the amount of the credit determined under this section for any taxable year
2.15exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
2.16to section 290.06, subdivision 37.
2.17 (f) For purposes of the credit for the sale of agricultural land only, the family member
2.18definitional exclusions in subdivision 1, paragraph (c), clauses (4) and (5), do not apply.
2.19For a sale to a family member to qualify for the credit, the sales price of the agricultural
2.20land must equal or exceed the assessed value of the land as of the date of the sale. For
2.21purposes of this paragraph, "sale to a family member" means a sale to a beginning farmer
2.22in which the beginning farmer or the beginning farmer's spouse is a family member of:
2.23 (1) the owner of the agricultural land; or
2.24 (2) a partner, member, shareholder, or trustee of the owner of the agricultural land.
2.25 (g) For a sale to an emerging farmer, the credit rate under paragraph (a), clause (1), is
2.26twelve percent rather than eight percent.
2.27 EFFECTIVE DATE.This section is effective for taxable years beginning after December
2.2831, 2024.
2.29 Sec. 2. Minnesota Statutes 2024, section 41B.0391, subdivision 4, is amended to read:
2.30 Subd. 4.Authority duties.(a) The authority shall:
2.31 (1) approve and certify or recertify beginning farmers as eligible for the program under
2.32this section;
2Sec. 2.
REVISOR EAP/VJ 25-0228301/29/25 3.1 (2) approve and certify or recertify owners of agricultural assets as eligible for the tax
3.2credit under subdivision 2 subject to the allocation limits in paragraph (c);
3.3 (3) provide necessary and reasonable assistance and support to beginning farmers for
3.4qualification and participation in financial management programs approved by the authority;
3.5 (4) refer beginning farmers to agencies and organizations that may provide additional
3.6pertinent information and assistance; and
3.7 (5) notwithstanding section 41B.211, the Rural Finance Authority must share information
3.8with the commissioner of revenue to the extent necessary to administer provisions under
3.9this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
3.10must annually notify the commissioner of revenue of approval and certification or
3.11recertification of beginning farmers and owners of agricultural assets under this section.
3.12For credits under subdivision 2, the notification must include the amount of credit approved
3.13by the authority and stated on the credit certificate.
3.14 (b) The certification of a beginning farmer or an owner of agricultural assets under this
3.15section is valid for the year of the certification and the two following years, after which
3.16time the beginning farmer or owner of agricultural assets must apply to the authority for
3.17recertification.
3.18 (c) For credits for owners of agricultural assets allowed under subdivision 2, the authority
3.19must not allocate more than $6,500,000 for taxable years beginning after December 31,
3.202022, and before January 1, 2024, and $4,000,000 for taxable years beginning after December
3.2131, 2023. The authority must allocate credits on a first-come, first-served basis beginning
3.22on January 1 of each year, except that recertifications for the second and third years of
3.23credits under subdivision 2, paragraph (a), clauses (1) and (2), have first priority. Any
3.24amount authorized but not allocated for taxable years ending before January 1, 2023, is
3.25canceled and is not allocated for future taxable years. For taxable years beginning after
3.26December 31, 2022, any amount authorized but not allocated in any taxable year does not
3.27cancel and is added to the allocation for the next taxable year. For each taxable year, 50
3.28percent of newly allocated credits must be allocated to emerging farmers. Any portion of a
3.29taxable year's newly allocated credits that is reserved for emerging farmers that is not
3.30allocated by September 30 of the taxable year is available for allocation to other credit
3.31allocations beginning on October 1.
3.32 EFFECTIVE DATE.This section is effective for taxable years beginning after December
3.3331, 2024.
3Sec. 2.
REVISOR EAP/VJ 25-0228301/29/25 4.1 Sec. 3. Minnesota Statutes 2024, section 290.06, subdivision 37, is amended to read:
4.2 Subd. 37.Beginning farmer incentive credit.(a) A beginning farmer incentive credit
4.3is allowed against the tax due under this chapter for the sale or rental of agricultural assets
4.4to a beginning farmer according to section 41B.0391, subdivision 2, and is limited to the
4.5amount stated on the certificate issued under section 41B.0391, subdivision 4.
4.6 (b) The credit may be claimed only after approval and certification by the Rural Finance
4.7Authority according to section 41B.0391.
4.8 (c) The credit is limited to the liability for tax, as computed under this chapter, for the
4.9taxable year. If the amount of the credit determined under this subdivision for any taxable
4.10year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
4.11each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
4.12the taxable year is carried first to the earliest of the taxable years to which the credit may
4.13be carried and then to each successive year to which the credit may be carried. The amount
4.14of the unused credit which may be added under this paragraph must not exceed the taxpayer's
4.15liability for tax, less the beginning farmer incentive credit for the taxable year.
4.16 (d) Credits allowed to a partnership, a limited liability company taxed as a partnership,
4.17an S corporation, or multiple owners of property are passed through to the partners, members,
4.18shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
4.19shareholder's, or owner's share of the entity's assets or as specially allocated in the
4.20organizational documents or any other executed agreement, as of the last day of the taxable
4.21year.
4.22 (e) For a nonresident or part-year resident, the credit under this section must be allocated
4.23using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).
4.24 (f) Notwithstanding the approval and certification by the Rural Finance Authority under
4.25section 41B.0391, the commissioner may utilize any audit and examination powers under
4.26chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
4.27credit and to assess for the amount of any improperly claimed credit.
4.28 (g) This subdivision expires at the same time and on the same terms as section 41B.0391,
4.29except that the expiration of this subdivision does not affect the commissioner of revenue's
4.30authority to audit or power of examination and assessment for credits claimed under this
4.31subdivision.
4.32 EFFECTIVE DATE.This section is effective for taxable years beginning after December
4.3331, 2024.
4Sec. 3.
REVISOR EAP/VJ 25-0228301/29/25