Ohio's Beginning Farmer Tax Credit Program aims to help level the playing field for beginning farmers in Ohio. It does so by providing income tax benefits for both a beginning farmer and someone who transfers farm assets to the beginning farmer. The new program first became available for the 2023 tax year, and sunsets on January 1, 2028, or when total income tax credits granted amount to $10 million. Participating in the program requires good planning, so now is the optimal time for existing and beginning farmers to consider how best to utilize the program while program funds are still available.
Our law bulletin, Ohio's Beginning Farmer Tax Credit Program, can help guide planning efforts. The bulletin explains how the program works and outlines the process for qualifying for the program's income tax credits. That process includes:
1. Meeting eligibility requirements to become certified by the Ohio Department of Agriculture (ODA) as a "qualified beginning farmer." The first step, then, is to determine whether an individual can meet the eligibility requirements, which are:
A resident of Ohio.
Seeking entry to or has entered farming within the last 10 years.
Farming or intending to farm in Ohio.
Has a total net worth of less than $800,000 in 2021, including spouse and dependent assets, as adjusted for inflation each year.
Provides the majority of the daily physical labor and management for the farm.
Has adequate farming experience or knowledge in the type of farming the individual is conducting.
Submits projected earnings statements and demonstrates profit potential.
Demonstrates farming will be a significant source of income for the individual.
Is not a partner, member, shareholder, or trustee of the assets the individual is seeking to purchase or rent.
Completes an ODA-approved financial management course.
2. Completing training and applying to ODA for certification as a "qualified beginning farmer." One component of attaining the program's eligibility requirements is completing a financial management course, which an individual who meets all other program requirements must do before applying to ODA to become certified. OSU Extension offers two of the 12 ODA-approved financial management programs an individual can complete to meet the training requirement.
After completing an eligible financial management course, the individual must submit an application to ODA's Office of Farmland Preservation to be approved as a qualified beginning farmer. The application requires submitting information and documentation showing that the individual meets the eligibility requirements.
If ODA approves the application, the individual will receive a state income tax credit certificate for the amount paid for completing the financial management course. The qualified beginning farmer can use the tax credit on the current year's tax return and can carry it forward for three succeeding tax years.
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Categories: Ohio, General