by Ryan Conklin

Effective Jan. 1, Ohio farmers can finally pursue the state income tax credits authorized by House Bill 95.

The state’s Beginning Farmer Tax Credit is now available to those who’ve recently entered the field and those who help beginning farmers. 

Signed into law by Gov. Mike DeWine on April 21, the credits are designed to promote the sale or leasing of agricultural assets to beginning farmers. Rep. Susan Manchester, R-Waynesfield, and Rep. Mary Lightbody, D-Westerville, sponsored and championed the bill through the General Assembly.

Earlier this year, the Ohio Department of Agriculture outlined specific eligibility requirements for beginning farmers and for asset owners. Based on the bill’s requirements, Ohioans looking to complete agricultural sales or leases this year should review ODA’s guidance and consider the applicability to upcoming transactions. Both beginning farmers and farm asset owners are eligible for tax distinct benefits.

To qualify, a beginning farmer is someone who:

Beginning farmers should consider qualifying for the program as soon as possible. Doing so may improve competitiveness in purchase transactions or lease arrangements for 2023 and beyond.

Furthermore, the department assembled a list of approved financial management courses that must be completed to establish eligibility. Although the tax credit for the beginning farmer is limited to the cost of the financial management program, the true objective is achieving competitiveness in the land, livestock and equipment markets.

Agricultural asset owners selling or leasing land, livestock, equipment or buildings would all qualify for the 3.99% tax credit. The time frame for claiming the credit may vary based on the timeline of the sale or type of lease contract. For land to qualify for the credit, it must satisfy Ohio’s requirements for current agricultural use value. Equipment dealers are prohibited from participating in the program.

Additionally, beginning farmers and asset owners must complete and submit separate forms to ODA. Those forms will confirm eligibility for the credit and must be carefully completed. Note, the forms and accompanying documentation must be submitted to ODA by Oct. 3 of the current tax year to claim the credit.

Remember, transactions that occurred in the 2022 tax year are not eligible for these tax benefits. To determine the applicability of House Bill 95 to a specific sale or rental arrangement, consult with your legal counsel and tax professional before executing any contracts. As always, a written purchase contract or lease instrument is strongly recommended.

For more information regarding the tax credits and eligibility requirements, visit the Ohio Department of Agriculture website.

Conklin is an attorney and owner of Wright & Moore Law Co. LPA in Ohio. Reach him at [email protected] or 740-990-0755.