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HF1626 (Legislative Session 94 (2025-2026))

Agricultural asset available credit amount cap eliminated.

Related bill: SF1419

AI Generated Summary

Purpose of the Bill

The purpose of this bill is to modify the existing tax incentives provided to owners of agricultural assets in Minnesota. Specifically, it aims to eliminate the cap on tax credits available for these owners when they sell or rent agricultural assets to beginning farmers. This change is intended to support new farmers entering the agricultural industry.

Main Provisions

  • Elimination of Credit Cap: The bill proposes removing the maximum limit on the tax credit that owners of agricultural assets can claim. Previously, these credits were capped at specific amounts for sale or rental of assets to beginning farmers.

  • Credit for Sale or Rental: Owners can claim a tax credit based on the lesser of the sale price or the fair market value of the assets, as follows:

    • Sale Credit: 8% of the asset value, with new provisions for higher rates for sales to emerging farmers.
    • Rental Credit:
    • 10% of gross rental income for cash rentals.
    • 15% of the cash equivalent for share rent agreements.

  • Special Provisions for Family Sales: The bill specifies that for a sale to qualify for the credit, the price must meet or exceed the asset's assessed value. This change allows sales to family members, under certain conditions, to be eligible for the credit without previous definitional restrictions.

  • Special Rate for Emerging Farmers: For sales to emerging farmers, the credit rate is increased from 8% to 12%.

  • Allowed Termination of Agreements: Agreements can be terminated for reasonable cause without disallowing previously awarded tax credits, provided the termination was not due to the owner's fault.

Significant Changes to Existing Law

  • Increase in Credit Rates: The bill increases the credit rate for sales to emerging farmers to 12% as opposed to the standard 8%.

  • Flexibility in Family Transactions: It widens the scope for family transactions to be eligible for tax credits by removing certain restrictions.

  • Cap Removal: Previously, there was a limit on the amount of credit an asset owner could claim; this limit has been proposed for elimination in specific provisions.

Relevant Terms

tax credit, agricultural assets, beginning farmer, emerging farmer, rental agreement, share rent, family member, tax incentive, tax liability.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 26, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Allows for a twelve percent credit rate for sales to emerging farmers."
      ],
      "removed": [
        "Eliminates the cap on the amount of credit for owners of agricultural assets."
      ],
      "summary": "This bill amends the tax credit rules for owners of agricultural assets under section 41B.0391.",
      "modified": [
        "Adjusts the tax credit limits and conditions for sales or rentals to beginning farmers."
      ]
    },
    "citation": "41B.0391"
  },
  {
    "analysis": {
      "added": [
        "Provides details on the beginning farmer incentive credit carryover."
      ],
      "removed": [],
      "summary": "This bill addresses tax computations and incentives, related to the credit carryover provisions under section 290.06.",
      "modified": [
        "Clarifies conditions under which credits could exceed tax liability."
      ]
    },
    "citation": "290.06"
  }
]

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