Minnesota 2025-2026 Regular Session

Minnesota House Bill HF1626 Compare Versions

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

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to taxation; individual income; eliminating the cap on the available amount
3	3	1.3 of the credit for owners of agricultural assets; amending Minnesota Statutes 2024,
4	4	1.4 sections 41B.0391, subdivisions 2, 4; 290.06, subdivision 37.
5	5	1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
6	6	1.6 Section 1. Minnesota Statutes 2024, section 41B.0391, subdivision 2, is amended to read:
7	7	1.7 Subd. 2.Tax credit for owners of agricultural assets.(a) An owner of agricultural
8	8	1.8assets may take a credit against the tax due under chapter 290 for the sale or rental of
9	9	1.9agricultural assets to a beginning farmer in the amount allocated by the authority under
10	10	1.10subdivision 4. An owner of agricultural assets is eligible for allocation of a credit equal to:
11	11	1.11 (1) eight percent of the lesser of the sale price or the fair market value of the agricultural
12	12	1.12asset, up to a maximum of $50,000;
13	13	1.13 (2) ten percent of the gross rental income in each of the first, second, and third years of
14	14	1.14a rental agreement, up to a maximum of $7,000 per year; or
15	15	1.15 (3) 15 percent of the cash equivalent of the gross rental income in each of the first,
16	16	1.16second, and third years of a share rent agreement, up to a maximum of $10,000 per year.
17	17	1.17 (b) A qualifying rental agreement includes cash rent of agricultural assets or a share rent
18	18	1.18agreement. The agricultural asset must be rented at prevailing community rates as determined
19	19	1.19by the authority.
20	20	1.20 (c) The credit may be claimed only after approval and certification by the authority, and
21	21	1.21is limited to the amount stated on the certificate issued under subdivision 4. An owner of
22	22	1Section 1.
23	23	REVISOR EAP/VJ 25-0228301/29/25
24	24	State of Minnesota
25	25	This Document can be made available
26	26	in alternative formats upon request
27	27	HOUSE OF REPRESENTATIVES
28	28	H. F. No. 1626
29	29	NINETY-FOURTH SESSION
30	30	Authored by Vang; Anderson, P. H.; Nelson; Hansen, R.; Lawrence and others02/26/2025
31	31	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
32	32	2.2a form and manner prescribed by the authority.
33	33	2.3 (d) An owner of agricultural assets or beginning farmer may terminate a rental agreement,
34	34	2.4including a share rent agreement, for reasonable cause upon approval of the authority. If a
35	35	2.5rental agreement is terminated without the fault of the owner of agricultural assets, the tax
36	36	2.6credits shall not be retroactively disallowed. In determining reasonable cause, the authority
37	37	2.7must look at which party was at fault in the termination of the agreement. If the authority
38	38	2.8determines the owner of agricultural assets did not have reasonable cause, the owner of
39	39	2.9agricultural assets must repay all credits received as a result of the rental agreement to the
40	40	2.10commissioner of revenue. The repayment is additional income tax for the taxable year in
41	41	2.11which the authority makes its decision or when a final adjudication under subdivision 5,
42	42	2.12paragraph (a), is made, whichever is later.
43	43	2.13 (e) The credit is limited to the liability for tax as computed under chapter 290 for the
44	44	2.14taxable year. If the amount of the credit determined under this section for any taxable year
45	45	2.15exceeds this limitation, the excess is a beginning farmer incentive credit carryover according
46	46	2.16to section 290.06, subdivision 37.
47	47	2.17 (f) For purposes of the credit for the sale of agricultural land only, the family member
48	48	2.18definitional exclusions in subdivision 1, paragraph (c), clauses (4) and (5), do not apply.
49	49	2.19For a sale to a family member to qualify for the credit, the sales price of the agricultural
50	50	2.20land must equal or exceed the assessed value of the land as of the date of the sale. For
51	51	2.21purposes of this paragraph, "sale to a family member" means a sale to a beginning farmer
52	52	2.22in which the beginning farmer or the beginning farmer's spouse is a family member of:
53	53	2.23 (1) the owner of the agricultural land; or
54	54	2.24 (2) a partner, member, shareholder, or trustee of the owner of the agricultural land.
55	55	2.25 (g) For a sale to an emerging farmer, the credit rate under paragraph (a), clause (1), is
56	56	2.26twelve percent rather than eight percent.
57	57	2.27 EFFECTIVE DATE.This section is effective for taxable years beginning after December
58	58	2.2831, 2024.
59	59	2.29 Sec. 2. Minnesota Statutes 2024, section 41B.0391, subdivision 4, is amended to read:
60	60	2.30 Subd. 4.Authority duties.(a) The authority shall:
61	61	2.31 (1) approve and certify or recertify beginning farmers as eligible for the program under
62	62	2.32this section;
63	63	2Sec. 2.
64	64	REVISOR EAP/VJ 25-0228301/29/25 3.1 (2) approve and certify or recertify owners of agricultural assets as eligible for the tax
65	65	3.2credit under subdivision 2 subject to the allocation limits in paragraph (c);
66	66	3.3 (3) provide necessary and reasonable assistance and support to beginning farmers for
67	67	3.4qualification and participation in financial management programs approved by the authority;
68	68	3.5 (4) refer beginning farmers to agencies and organizations that may provide additional
69	69	3.6pertinent information and assistance; and
70	70	3.7 (5) notwithstanding section 41B.211, the Rural Finance Authority must share information
71	71	3.8with the commissioner of revenue to the extent necessary to administer provisions under
72	72	3.9this subdivision and section 290.06, subdivisions 37 and 38. The Rural Finance Authority
73	73	3.10must annually notify the commissioner of revenue of approval and certification or
74	74	3.11recertification of beginning farmers and owners of agricultural assets under this section.
75	75	3.12For credits under subdivision 2, the notification must include the amount of credit approved
76	76	3.13by the authority and stated on the credit certificate.
77	77	3.14 (b) The certification of a beginning farmer or an owner of agricultural assets under this
78	78	3.15section is valid for the year of the certification and the two following years, after which
79	79	3.16time the beginning farmer or owner of agricultural assets must apply to the authority for
80	80	3.17recertification.
81	81	3.18 (c) For credits for owners of agricultural assets allowed under subdivision 2, the authority
82	82	3.19must not allocate more than $6,500,000 for taxable years beginning after December 31,
83	83	3.202022, and before January 1, 2024, and $4,000,000 for taxable years beginning after December
84	84	3.2131, 2023. The authority must allocate credits on a first-come, first-served basis beginning
85	85	3.22on January 1 of each year, except that recertifications for the second and third years of
86	86	3.23credits under subdivision 2, paragraph (a), clauses (1) and (2), have first priority. Any
87	87	3.24amount authorized but not allocated for taxable years ending before January 1, 2023, is
88	88	3.25canceled and is not allocated for future taxable years. For taxable years beginning after
89	89	3.26December 31, 2022, any amount authorized but not allocated in any taxable year does not
90	90	3.27cancel and is added to the allocation for the next taxable year. For each taxable year, 50
91	91	3.28percent of newly allocated credits must be allocated to emerging farmers. Any portion of a
92	92	3.29taxable year's newly allocated credits that is reserved for emerging farmers that is not
93	93	3.30allocated by September 30 of the taxable year is available for allocation to other credit
94	94	3.31allocations beginning on October 1.
95	95	3.32 EFFECTIVE DATE.This section is effective for taxable years beginning after December
96	96	3.3331, 2024.
97	97	3Sec. 2.
98	98	REVISOR EAP/VJ 25-0228301/29/25 4.1 Sec. 3. Minnesota Statutes 2024, section 290.06, subdivision 37, is amended to read:
99	99	4.2 Subd. 37.Beginning farmer incentive credit.(a) A beginning farmer incentive credit
100	100	4.3is allowed against the tax due under this chapter for the sale or rental of agricultural assets
101	101	4.4to a beginning farmer according to section 41B.0391, subdivision 2, and is limited to the
102	102	4.5amount stated on the certificate issued under section 41B.0391, subdivision 4.
103	103	4.6 (b) The credit may be claimed only after approval and certification by the Rural Finance
104	104	4.7Authority according to section 41B.0391.
105	105	4.8 (c) The credit is limited to the liability for tax, as computed under this chapter, for the
106	106	4.9taxable year. If the amount of the credit determined under this subdivision for any taxable
107	107	4.10year exceeds this limitation, the excess is a beginning farmer incentive credit carryover to
108	108	4.11each of the 15 succeeding taxable years. The entire amount of the excess unused credit for
109	109	4.12the taxable year is carried first to the earliest of the taxable years to which the credit may
110	110	4.13be carried and then to each successive year to which the credit may be carried. The amount
111	111	4.14of the unused credit which may be added under this paragraph must not exceed the taxpayer's
112	112	4.15liability for tax, less the beginning farmer incentive credit for the taxable year.
113	113	4.16 (d) Credits allowed to a partnership, a limited liability company taxed as a partnership,
114	114	4.17an S corporation, or multiple owners of property are passed through to the partners, members,
115	115	4.18shareholders, or owners, respectively, pro rata to each based on the partner's, member's,
116	116	4.19shareholder's, or owner's share of the entity's assets or as specially allocated in the
117	117	4.20organizational documents or any other executed agreement, as of the last day of the taxable
118	118	4.21year.
119	119	4.22 (e) For a nonresident or part-year resident, the credit under this section must be allocated
120	120	4.23using the percentage calculated in section 290.06, subdivision 2c, paragraph (e).
121	121	4.24 (f) Notwithstanding the approval and certification by the Rural Finance Authority under
122	122	4.25section 41B.0391, the commissioner may utilize any audit and examination powers under
123	123	4.26chapter 270C or 289A to the extent necessary to verify that the taxpayer is eligible for the
124	124	4.27credit and to assess for the amount of any improperly claimed credit.
125	125	4.28 (g) This subdivision expires at the same time and on the same terms as section 41B.0391,
126	126	4.29except that the expiration of this subdivision does not affect the commissioner of revenue's
127	127	4.30authority to audit or power of examination and assessment for credits claimed under this
128	128	4.31subdivision.
129	129	4.32 EFFECTIVE DATE.This section is effective for taxable years beginning after December
130	130	4.3331, 2024.
131	131	4Sec. 3.
132	132	REVISOR EAP/VJ 25-0228301/29/25