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TAX TWEAK: Co-sponsored by Iowa Sen. Joni Ernst, a bill proposes to exclude the first $5,000 in earnings from a 4-H or FFA project from federal income tax. Idea is to encourage more young people to participate in ag projects and spark interest in ag careers.

Tax break for 4-H and FFA students

A small change in the tax code could help encourage a new generation of farmers.

Iowa U.S. Sen. Joni Ernst wants to find ways to get more young people interested and involved in agriculture. In mid-April she and Kansas Sen. Jerry Moran introduced legislation that would make the first $5,000 of income earned by students on ag projects through 4-H or FFA tax free. The students would have to be 18 years old or younger. The bill is S-2774, the Agriculture Students EARN Act. EARN stands for Encourage, Acknowledge, Reward, Nurture.

Need to help plant the seeds for a new generation

By offering this proposed federal tax change, the senators hope to get it passed and signed into law as an incentive to ultimately get more young people to return to live and work in rural communities.

“For agriculture and our rural way of life to thrive, it is essential for a new generation of young people to return to rural America to live, work and raise their families,” Moran said. “Our policies, including the tax code, should encourage this goal by fostering student interest in pursuing a career in agriculture.”

Encourage youth to learn more about agriculture

Ernst, a former member of 4-H, said: “We must encourage our youth to get involved and learn more about modern agriculture. A student who doesn’t come from a farming background may not realize the ag industry has a demand for everything from food scientists to design engineers; agronomists to drone pilots.”

Ernst added, “It is important that we encourage our students to stay engaged in vocational and ag education programs, especially as demand for young farmers continues to grow. I’m proud to support the Agriculture Students EARN Act, which would promote our youth’s involvement in programs that serve as an introduction to careers in agriculture. Alleviating some of the tax burden these hardworking students face on the income they earn from 4-H or FFA projects is a step in the right direction to help bridge the generational gap, and ensure our youth are ready to take the reins when their time comes.”

Incentive for students involved in 4-H and FFA

Ag projects completed by students under the supervision of 4-H clubs and FFA chapters may include showing animals at local and state fairs, growing and harvesting crops, building ag mechanics projects, and many other possibilities, she notes. The projects encourage personal growth and responsibility, while also providing opportunity for students to generate modest revenues.

The money earned by a student is often used to finance future ag projects, deposited in savings, or used to fund a college education. The bill S-2774 would protect students involved in 4-H and FFA and the money they earn from the IRS by lowering or eliminating the tax burden on the students.

Projects encourage personal growth, responsibility

“I was in 4-H growing up, and my daughter is currently involved in the program,” said Ernst. “So I’ve witnessed firsthand the leadership, communication, creativity and business management skills that it instills. With the average age of the U.S. farmer approaching 60, and only 2% of the American population engaged in farming and ranching, it is imperative that we provide encouragement to young people to consider a career in feeding and fueling not only our nation, but the world.”

According to the latest official U.S. Ag Census, the average age of the U.S. farmer is over 58 years old and trending upward. “By lowering the tax burden on projects, S-2774 would encourage more students to complete ag projects under 4-H and FFA,” says Ernst. “The hands-on experience that supervised ag projects provide aims to inspire a new generation of farmers and ranchers.”

Supporters of the legislation include the National FFA Organization, National 4-H Council, American Farm Bureau, National Farmers Union, and National Young Farmers Coalition.

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