Nebraska Beginning Farmer Tax Credit
The Nebraska Beginning Farmer Tax Credit Act provides an incentive for a farmer who is retiring or who wants to cut back on his or her operation to rent to a beginning farmer. A qualified beginning farmer or rancher must (1) be domiciled in Nebraska or spend more than six months in the state, (2) entered into farming or livestock production or be seeking to do so; and (3) intend to farm or raise crops or livestock on land in Nebraska, in addition to a number of other requirements.
Landowners receive a tax credit against their Nebraska income tax for assets rented to qualified beginning farmers for a period of three years. The landowner can receive a credit up to (a) ten percent of the gross rental income stated in a cash rent agreement, or (b) fifteen percent of the cash equivalent of the gross rental income in a share-rent rental agreement. In order to qualify for the fifteen percent credit, the rental agreement must provide for shared risk of loss or shared production expenses between the parties.
The application process requires the landowner and beginning farmer to complete a Beginning Farmer Application packet with the Nebraska Department of Agriculture. The Beginning Farmer Board will evaluate the application and determine eligibility and the amount of credit or exemption for each landowner and farmer. The beginning farmer receives a chance to rent on a three-year lease, rather than a one-year lease. In addition, the beginning farmer will receive a tax credit to reimburse the cost of a financial management class, up to $500. The hope is that the experienced landowner will be a mentor to the beginning farmer to increase his or her chances of success.
Nebraska Investment Finance Authority Loans
While the Nebraska Beginning Farmer Tax Credit Act is directed at landowners, loan programs are available for beginning farmers and ranchers from the Nebraska Investment Finance Authority (“NIFA”). NIFA loans are only available to individuals, not corporations or partnerships, who (1) have a net worth less than $500,000, (2) will materially and substantially participate in the operation, and (3) who have never had direct or indirect ownership of any parcel of land greater than 30% of the average size of a farm in the county where the parcel is located. The loans provided by NIFA cannot exceed $500,000 and must be used solely for land and property used in Nebraska.
Beginner farmers and landowners in the Cornhusker State need to check with their attorneys, accountants, and bankers to determine whether they qualify for these incentives.
For more information check out https://www.nextgen.nebraska.gov/index.html.
Coming next: Federal Incentives.
Authored by: Katie French