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Nebraska Improves Beginning Farmer Tax Credits

Changes go into effect Jan. 1.

Don McCabe, Nebraska Farmer Editor

October 15, 2006

3 Min Read

It's a dilemma faced by farmers wanting to cut back or even retire: Who will take over the farm or ranch if there's no son or daughter willing to do so?

An underused Nebraska tax credit program may be one option, especially now that it was tweaked and improved by the Nebraska Legislature in 2006. Amendments to the Beginning Farmer Tax Credit Act, originally passed in 1999, go into effect Jan. 1, 2007, and should make the program more attractive, says Marian Beethe at the Nebraska Department of Agriculture, the agency administering the program.

The program offers a tax credit to farmers or ranchers who help a beginning farmer get started in farming.

"A refundable Nebraska tax credit is given to the owner of agricultural assets as an incentive to rent or lease his or her land, machinery, livestock or livestock facilities for three years to a beginning farmers or livestock producer," says Beethe.

The rent can be based on cash rent, share-crop, even cow-calf leases.

Here's how the 2006 Legislature improved the program:

  • Added for the first time a tax credit for the beginning farmer of up to $500 to reimburse the cost of a required financial management class.

  • Increased the tax credit for the owner to 10% for cash rent and 15% for a share-crop rent agreement for three years. (The tax credit prior to the 2006 amendments had been equal to 5% of the amount of rent received each year, on each rented asset, for three years.)

  • Expanded the owner's eligibility to include the farmer's spouse, child or sibling who inherited the ag asset.

  • Raised the beginning farmer's net worth limit from $100,000 to $200,000.

Beethe says the high cost of buying land is one reason beginning farmers or ranchers face difficulty getting started. "The tax credit provides an incentive to encourage ag asset owners to rent to beginning farmers. Renting a farm or livestock operation will help provide the experience and income necessary to qualify for other beginning farmer programs."

The program allows the owner to also serve as the mentor to the younger farmer.

Here are qualifications for the farm or livestock owner:

  • Be a Nebraska resident.

  • Have derived at least 50% or more of his or her gross annual income from farming or livestock production.

  • Have provided the majority of the day-to-day physical labor and management for 5 of the last 15 years.

  • Be eligible to receive a state income tax credit.

  • Not be related to the beginning farmer or livestock producer.

A qualified beginning farmer or livestock producer must:

  • Be a Nebraska resident.

  • Have farmed or raised livestock for less than 10 of the past 15 years.

  • Not be related to the owner of the rented assets.

  • Provide a majority of the day-to-day physical labor and management.

  • Have livestock/farming experience or education.

  • Participate in a board-approved financial management educational program.

  • Have a net worth of not more than $200,000.

  • Be actively involved with farming or ranching.

For information, contact Beginning Farmer Program, Nebraska Department of Agriculture, P.O. Box 94947, Lincoln, NE 68509-4947, call (402) 471- 6890 or 1-800-446-4071, or go online at

About the Author(s)

Don McCabe

Nebraska Farmer Editor

Growing up on a farm near Newcastle, Neb., Don McCabe was always interested in agriculture. After a four-year stint in the U.S. Navy, he earned his journalism degree from the University of Nebraska. He joined the staff at Nebraska Farmer in 1977, first as a writer and eventually serving for many years as the publication's editor. McCabe is now retired in Lincoln, but still contributes regularly to Nebraska Farmer as a freelance writer. 

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