Start of the tax deduction program for beginning farmers – Newstalk KZRG

JEFFERSON CITY, Mo. – The Missouri Agricultural and Small Business Development Authority (MASBDA) will begin accepting applications for a new program to support beginning farmers in Missouri beginning August 1.

A farm owner may be eligible for a deduction from his/her adjusted gross income in Missouri based on the income he/she receives from selling or renting/leasing farmland to a beginning farmer.

“This program is the perfect complement to our existing Beginning Farmer Loan Program,” said Jill Wood, Executive Director of MASBDA. “Our Beginning Farmer Loan Program allows local lenders to provide lower interest rates on loans to beginning farmers who purchase farmland. While the two programs operate independently, they both benefit landowners and beginning farmers.”

A farm owner who sold farmland to a beginning farmer on or after August 28, 2023, may deduct from his Missouri adjusted gross income, to the extent included in adjusted federal gross income, an amount equal to the portion of the capital gain received from the sale of the farmland, in accordance with the following:

Amount of capital gain: Percentage of capital gains deduction:

$0 – $2 million 100%

$2,000,001 – $3,000,000 80%

$3,000,001 – $4,000,000 60%

$4,000,001 – $5,000,000 40%

$5,000,001 – $6,000,000 20%

A farm owner who rents, leases, or enters into a crop-share agreement (not to exceed 10 years) with a qualified beginning farmer may also be eligible for a deduction from his Missouri adjusted gross income. This deduction is equal to the amount of annual income the farm owner receives under the agreement, to the extent included in federal adjusted gross income, up to $25,000 per taxable year.

“The creation and approval of this program is the result of our state resource organizations working together to support the transition of Missouri farmland to the next generation,” said Agriculture Director Chris Chinn. “This program provides an incentive for a landowner to sell or lease their land to an emerging farmer who will keep the land in production, rather than dividing the land into smaller parcels for housing or commercial development.”

Once MASBDA has verified that both the farm owner and the beginning farmer meet the requirements of the program, a dated certification letter is issued to the farm owner. The beginning farmer and the Missouri Department of Revenue also receive a copy of the certification.

In order to receive the deduction, it is the farm owner’s responsibility to provide the certification to the Missouri Department of Revenue when filing their tax return, using Form MO-5955. For transactions that occurred in tax year 2023, the farm owner may need to file an amended return in order to take the deduction.

For program information and to apply, visit masbda.com or contact the Missouri Agricultural and Small Business Development Authority at (573) 751-2129 or [email protected].