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SB 13

Individual income tax: credit; beginning farmer tax credit; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 279.

2025-2026 Regular Session Introduced by Joe Bellino

SB 13 creates a state income tax credit to encourage owners to sell or rent farm assets to beginning farmers, capped at $5M/year, with certs, limits, and annual reporting.

REFERRED TO COMMITTEE ON APPROPRIATIONS
#agriculture:agribusiness #individualincometax:credit
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Bill Summary · SB 13

SB 13 — Beginning Farmer Tax Credit (adds MCL §279)

Status: Referred to Committee on Appropriations
Introduced: August 15, 2025
Subject: Agriculture; individual income tax credit

Purpose / intent

SB 13 creates a targeted state individual income tax credit to encourage transfers of agricultural assets to beginning farmers. The stated objective is to increase opportunities for new entrants into farming by providing tax incentives to current farm asset owners who sell or rent assets to qualified beginning farmers.

Key provisions

  • Scope and timing

    • Credit available for tax years beginning on or after January 1, 2025.
    • Certificates required from the Department (in consultation with the Department of Agriculture and Rural Development (MDARD)) before claiming a credit. The Department will not issue certificates after December 31, 2029 (but certificates issued before 1/1/2030 remain claimable).

  • Types and amounts of credit (claimed by the owner of the agricultural asset)

    • Sale: 5% of the lesser of sale price or fair market value, capped at $32,000 per sale.
    • Qualified rental agreement: 10% of gross rental income in each of the first three years of the rental, capped at $7,000 per year.
    • Share rent agreement: 15% of the cash equivalent of gross rental income in each of the first three years, capped at $10,000 per year.
    • Rental/share-rent credits must be calculated on gross rental income actually received or accrued consistent with the taxpayer’s federal accounting method.

  • Certification & claim procedures

    • Owners must obtain a certificate from the Department (with MDARD) before claiming credits.
    • Tax returns claiming the credit must attach the certificate. For rental/share-rent claims, also attach proof the agreement was active for the claimed year.
    • Certificate must state owner status, that the recipient is a certified beginning farmer, the maximum credit amount(s), and taxpayer identification.

  • Program limits & carryover

    • Aggregate cap: total credits approved by the State shall not exceed $5,000,000 per calendar year.
    • Limited rollover: if total approved in a year is below $5M, the Department may carry forward for one year only the smaller of (a) $5M minus prior-year approved total or (b) $1,000,000.
    • If a credit exceeds a taxpayer’s tax liability, unused portion is nonrefundable but may be carried forward up to 5 years.

  • Reporting

    • Beginning February 1, 2026, and annually thereafter while certificates remain in effect, the Department (with MDARD) must report to legislative fiscal/tax/agriculture committees. Report must include counts and amounts by credit type, geographic distribution, asset types, distribution of beginning farmers, and number/amount of applications rejected for lack of allocation.

  • Definition highlights: “Beginning farmer” (selected excerpts)

    • Resident of the state; entered or seeking entry into farming within the last 10 years; intends to farm in-state.
    • Not a family member of the owner (or of a partner/member/shareholder/trustee of the owner).
    • Net worth no greater than $800,000 (indexed annually by CPI).
    • Provides majority of day‑to‑day physical labor and management of the farm.

Who is affected

  • Primary beneficiaries: owners of agricultural assets who sell or rent to qualifying beginning farmers (receive the credit).
  • Directly affected parties: beginning farmers (must be certified by MDARD), the Department of Treasury (administers certificates and credits) and MDARD (certifies beginning farmer status).
  • State fiscal exposure: capped at approvals of $5 million per calendar year (subject to the limited carryforward rule).

Procedural/timeline notes

  • Introduced August 15, 2025 and currently referred to Appropriations.
  • Certificate issuance deadline: no new certificates after December 31, 2029.
  • Annual administrative/reporting duties begin Feb 1, 2026 and continue while certificates remain effective.

Potential impacts (high-level)

  • Encourages intergenerational or market transfers of farmland and farm equipment to new farmers.
  • Creates administrative workload for Treasury and MDARD (certification, allocation tracking, annual reporting).
  • Budgetary exposure limited by the statutory $5 million annual cap, though actual fiscal impact depends on uptake and timing of certified transactions.

Compiled from official sources — confirm details with the bill’s official record.

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