Ohio Beginning Farmer Tax Credit Program

The Beginning Farmer Tax Credit program was created through House Bill 95, signed into law by Governor Mike DeWine on April 21, 2022. This is a state income tax credit offered in two categories: (1) beginning farmers who attend an ODA-approved financial management program receive a tax credit for the cost of the program; and (2) individuals or businesses that sell or rent farmland, livestock, buildings, or equipment to a beginning farmer receive a credit. Administered by the Ohio Department of Agriculture's Office of Farmland Preservation. Amounts are set as tax credits in statute; no absolute per-recipient dollar award is published.

A beginning farmer is a resident of Ohio; is seeking entry into farming or has less than 10 years experience as a farm owner/operator; farms or intends to farm on land in Ohio; is not a partner, member, shareholder, or trustee of the assets they seek to purchase or rent; has a total net worth of less than $800,000 (including spouse and dependent assets, adjusted for inflation annually); provides the majority of daily physical labor and management of the farm; has adequate farming experience; submits projected earnings statements; demonstrates farming will be a significant source of income; and participates in an ODA-approved financial management program. A separate Asset Owner category applies to those who sell or rent agricultural assets to a beginning farmer.

A state income tax credit, so the benefit is a percentage of a transaction rather than a fixed award. ODA publishes no dollar ceiling, floor, or total credit cap for either category.

For the beginning farmer: "The beginning farmer receives a tax credit for the cost of the financial management program." The credit equals what the ODA-approved financial management course cost — no percentage or cap is stated.

For the asset owner who sells or rents to a beginning farmer, "the credit equals 3.99% of one of the following":

• "In the case of a sale, the sale price. The credit must be claimed in the year of the sale."

• "In the case of a rental, the gross rental income that the individual or business received during the first three years of the rental agreement. To qualify for the credit, an asset must be rented at prevailing community rates. In the case of a rental, the credit is claimed over the first three years of the rental or share-rent agreement."

• For a share-rent agreement, the gross rental income received during the first three years of that agreement.

So a rental credit is spread across three years rather than paid at once, and the rent must be at prevailing community rates to qualify at all. Land only counts as an eligible agricultural asset if "it must total at least 10 acres or produce an average annual income of at least $2,500 from farming." "Equipment dealers and similar businesses that sell agricultural assets for profit are not eligible for the credit." A qualifying beginning farmer must have "a total net worth of less than $800,000, including spouse and dependent assets, as adjusted for inflation each year."

Approval produces a tax credit certificate issued by ODA; there is no cash disbursement, cost-share percentage, or match requirement.

A beginning farmer submits a completed Beginning Farmer Tax Credit application (PDF) with required attachments to ODA at BeginningFarmer@agri.ohio.gov. ODA reviews the application; once approved, a tax credit certificate is issued. Asset owners use the Asset Transfer Form.