Update: The application window for the 2020 tax year opens Feb. 1, 2021. Be sure to apply as soon as possible as funds are limited and will be awarded on a first-come, first-served basis.
The Pennsylvania Department of Community and Economic Development has released details of the new Beginning Farmer Tax Credit.
The income tax credit provides an incentive to lease or sell land, buildings and/or equipment to beginning farmers. The program allows for a one-time tax credit for property sold to a beginning farmer or a multi-year credit for property leased. The tax credit could be used to aid in family transitions—such as sales from a parent or grandparent to a child or grandchild—or to help an unrelated beginning farmer.
Pennsylvania Farm Bureau played a central role in developing and advocating for legislation that established the credit.
Beginning farmers who participate in the program must be certified by DCED by demonstrating that they have the experience or transferable skills needed to work in agriculture, have not received income from farming for longer than 10 years, and plan to farm in Pennsylvania, providing the majority of the labor and management for their operation.
Property owners can claim a credit equal to 5 percent of the sale price or fair market value (whichever is lower) of an asset sold to a beginning farmer, up to a maximum of $32,000. For rental agreements, the credit is equal of 10 percent of gross rental income for the first, second and third years of the rental agreement, up to a maximum of $7,000 per year. The program is capped at $5 million for the 2020 tax year and $6 million for 2021 tax year.