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Serving: WI

Beginning Farmer, Farm Asset Owner Tax Credits Available

Beginning Farmer, Farm Asset Owner Tax Credits Available
Maximum credit allowed is $500 for beginning farmers.

The Wisconsin Department of Agriculture, Trade and Consumer Protection encourages individuals to take advantage of the Beginning Farmer and Farm Asset Owner Tax Credits.  These refundable credits are available against state income taxes, for tax years beginning after Dec. 31, 2010. 

"I look forward to assisting individuals interested in starting farming through the Beginning Farmer and Farm Asset Owner Tax Credits," said State Ag Secretary Ben Brancel.  "These credits offer an incentive for established farmers to lease their assets and an opportunity for beginning farmers to complete a financial management program."

The tax credits are based on a three-year written cash lease arrangement between a beginning and established farmer.  An established farmer has engaged in farming for a total of at least 10 years and owns agricultural assets.  A beginning farmer has a net worth of less than $200,000, has farmed for fewer than 10 years out of the preceding 15 years, and uses the leased agricultural assets for farming.

The farm asset owner tax credit equals 15% of the lease amount received by the established farmer from a beginning farmer in the claim year.  The tax credit goes against depreciable agricultural assets, which includes machinery, equipment, facilities, or livestock.  Some examples may be irrigation tools, greenhouse space, a milking barn, or tractors.

The credit may only be claimed the first three years of any lease of the established farmer's assets to a beginning farmer.  No part-time residents or nonresidents may claim this credit.

The beginning farmer tax credit equals the amount paid by the beginning farmer to enroll in a financial management program in the claim year. Beginning farmers may take classes through the Wisconsin Technical College System, the University of Wisconsin-Extension, the University of Wisconsin-Madison, or other approved institution.  This credit can be claimed on a one-time basis, and the maximum credit allowed is $500. 

To receive the credit, both a beginning farmer and an established farmer would have to apply to be certified by DATCP after review of an application. An application would include a business plan, description of the beginning farmer's education or training, and a copy of the written lease.

"Because the Beginning Farmer and Farm Asset Tax Credits are refundable, if the allowable amount of the claim exceeds the tax liability due by the beginning or established farmer, he or she will receive payment back," explains Paul Dietmann, director of DATCP's Farm Center. "I recommend farmers contact DATCP today for assistance in writing leases and business plans to capitalize on this tax credit."

For more information about these tax credits or questions on completing lease agreements and business plans, contact DATCP's Wisconsin Farm Center at 1-800-942-2474 or [email protected].

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