Beginning Farmer Tax Credit
We recently interviewed Senator Elder Vogel, Senator of Pennsylvania’s 47th district, representing Beaver, Butler and Lawrence Counties, and Chairman of the Senate Agriculture and Rural Affairs Committee. Applications for the new Beginning Farmer Tax Credit are now being accepted, and Chairman Vogel discussed the initiative that was created through legislation which he authored.
Listen to the full podcast episode with Chairman Vogel here.
Chairman, you are certainly no stranger to agriculture, having grown up and still living on your family farm. Could you share your perspective on Pennsylvania’s agriculture industry and how the Beginning Farmer Tax Credit program can help?
Our ag industry is very strong in Pennsylvania because we're very diversified. We have crops, dairy, poultry, hogs and much more. Because of the COVID-19 pandemic, many people want to buy local. Farmer’s markets are booming. Farmers who direct market beef to customers are even having difficulties getting animals that need to be butchered because of the increased demand.
One challenge in agriculture is that farmers are getting older in Pennsylvania. The average age of Pennsylvania farmer is around 58 or 59 years old. That means there are a lot of people over 65. I'm getting close to that age as well.
It’s important that our industry supports the next generation of farmers. There are a lot of young people who would like to farm who didn't grow up on a farm or didn't marry into a farm. We need find a way to bring young people in to keep the agriculture industry going.
The Beginning Farmer Tax Credit was an idea that was started in Minnesota. The program has worked well in that state, and I brought the concept to Pennsylvania which gives farmers the opportunity either to get the tax credit for selling their properties to a beginning farmer or renting their farm for several years to a beginning farmer. Maybe a farmer isn’t quite ready to retire and just wants to rent it for several years to a beginning farmer, it gives them the opportunity to do that. If a farmer chooses to sell their farm to someone, there’s an even larger tax credit for that. We hope the program can help support the next generation of agriculture in Pennsylvania.
Could you highlight the main details about the Beginning Farmer Tax Credit program? Who is eligible and how does it work?
Beginning farmers must meet eligibility criteria and need to be certified by the PA Department of Agriculture to say that they are a beginning farmer. To qualify the beginning famer needs to not had any farming experience or hasn't had any federal gross income tax from farming for the past 10 years. The applicant also needs to fill out an application which is available at the Department of Agriculture's website.
The program works through the tax codes. The IRS, PA Department of Revenue, Department of Community and Economic Development are involved in the program, including the PA Department of Agriculture. There are $5 million for tax credits allocated for this year in 2020, and then $6 million each year after until 2030.
If a farmer chooses to sell his farm, he/she can get up to a $32,000 tax credit. Or if the farmer wants to rent their farm to a beginning farmer, he/she can get $7,000 a year in tax credits for the first three years.
Like I shared earlier, Minnesota has a similar program and they've had great success with it. We are glad to get our program launched and in place so that farmers can take advantage of it this year and beyond.
Are there any other thoughts you'd like to share today?
It’s been a difficult year for all of us, especially in agriculture. We know that in the dairy industry many farmers had to dump milk. I’m glad to share we have $15 million in place to help farmers or processing plants who had to dump milk during the pandemic. Funding is available up to $1,500 per farm for the first round. If there's any money left over, that'll be prorated out to the farmers again in a second round.
Again, there are also interesting dynamics in the beef industry. The industry is growing with the increased interest in buying local. Farmers markets went crazy here this spring. Many farmers I know are sold out of meat. I talked to a gentleman the other day and he literally has nothing in stock right now except a couple of soup bones.
I encourage everyone to hang in there and be safe. Obviously, Coronavirus has made it tough in many ways in agriculture including the impacts on our packing plants and farms having to change the way they do business. We will get through it the best we can and some day it'll end and life will go on. So I just want to thank everyone for hanging in there and keeping agriculture the number one industry in Pennsylvania.
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