Applications for Iowa's 2024 Beginning Farmer Tax Credit program are open

Iowa landlords and agricultural asset owners may be eligible for a tax credit for doing business with beginning farmers.

By

Natalina Sents Bausch

Updated on January 6, 2024

Tax stands in wooden letters in front of a paper tax form with a yellow pencil to the right — Photo: Geri Lavrov/Getty Images

The Iowa Finance Authority is now accepting applications for the 2024 Beginning Farmer Tax Credit. This annual program is available to agricultural asset owners who lease their land, equipment, and/or buildings to beginning farmers.

“Transitioning our farms to the next generation requires both public and private sector solutions, and Iowa’s Beginning Farmer Tax Credit has historically been an important tool to help young and beginning farmers get established within production agriculture,” said Mike Naig, Iowa Secretary of Agriculture. “I remain focused on addressing this critical challenge as we work to find new solutions to keep Iowa agriculture productive and our rural communities thriving.”

Application deadline, limited funds

Applications for Iowa's Beginning Farmer Tax Credit will be accepted until Aug. 1, 2024, or until the tax credit allocation of $12 million has been awarded. Applications are processed on a first-come, first-completed basis.

Completed applications will be given preference over incomplete applications and will be processed first. Applicants who submit important applications will be notified via email and given 30 days to submit all missing information. After 30 days, the application will be withdrawn.

An application can be downloaded from the Iowa Finance Authority’s website.

Completed applications should be mailed in one packet to:

Iowa Finance Authority
Attn: Iowa Agricultural Development Division (IADD)
1963 Bell Ave.
Des Moines, IA 50315

Who qualifies for the Iowa tax credit

Applicants for the Iowa Beginning Farmer Tax Credit program must meet the following criteria.

Resident of Iowa and at least 18 years of age.
Have a net worth of no more than $833,000.
Have sufficient education, training, or experience for the anticipated farm operations.
Have access to adequate working capital, equipment, and other items that are necessary to operate the farm.
Be the owner/operator.
There is no restriction on off-farm income.

Terms of the Iowa tax credit

Terms of the Iowa Beginning Farmer Tax Credit include:

Lease must be for a minimum of two years, but no more than five years.
For cash rent leases, the tax credit equals 5% of the cash rent. The cash rent cannot be more than 30% above the average cash rent for the county according to the most recent Iowa State University cropland survey.
For crop share leases, the tax credit is 15%.
The Iowa tax credit program is only for leasing and does not include sales.

Details and benefits for asset owners

The tax credits for each year of the lease (must be 2-5 years) are allocated in the year that the applicants apply/first year of the lease.
The asset owner will receive a tax credit certificate at the end of each year of the lease.
The asset owner is limited to a $50,000 credit per year, per project.
The tax credit can be used for State of Iowa taxes owed and can be carried over for 10 years, if not used. The credit cannot be transferred to anyone other than a surviving spouse or estate/trust due to death of the asset owner.
The asset owner is allowed to use the program for 15 years, beginning in 2019.

Benefits for beginning farmers

This program is designed to give beginning farmers access to land that they may not have access to if it weren’t for the tax credit for the asset owner.
There is a max cash rent rate allowed and asset owners are not allowed to increase the rent or make any changes to the lease that do not benefit the beginning farmer when participating in this program.