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Missouri Beginning Farmer Tax Deduction Program
Missouri is offering a program to incentivize the sale of farmland to beginning farmers. A farm owner who sells farmland to a beginning farmer on or after August 28, 2023 may subtract from his/her Missouri adjusted gross income, to the extent included in federal adjusted gross income, an amount equal to the portion of capital gains received from the sale of such farmland that such farm owner receives in the tax year for which such owner subtracts such capital gain according to the following:
| Capital Gain Amount: |
Percentage of Capital Gains Deduction: |
|---|---|
| The first $0 - $2 million | 100% deductible |
| The next $1,000,000 ($2,000,001 - $3,000,000) |
80% deductible |
| The next $1,000,000 ($3,000,001 - $4,000,000) |
60% deductible |
| The next $1,000,000 ($4,000,001 - $5,000,000) |
40% deductible |
| The next $1,000,000 ($5,000,001 - $6,000,000) |
20% deductible |
A farm owner who rents, leases, or enters into a crop-share arrangement (not exceeding 10 years) with a qualified beginning farmer can reduce his/her Missouri adjusted gross income (cash rent income, in the case of a lease) equal to the amount of income received by the farm owner under the agreement, to the extent included in federal adjusted gross income, up to $25,000 per tax year.
Who is Eligible?
A Beginning Farmer is a taxpayer who:
- Has filed at least one but not more than ten Internal Revenue Service Schedule F (Form 1040) Profit or Loss from Farming forms since turning eighteen years of age; or
- Is approved for a beginning farmer loan through the USDA Farm Service Agency Beginning Farmer direct or guaranteed loan program; or
- Has a farming operation that is determined by the department of agriculture to be new production agriculture but is the principal operator of a farm and has substantial farming knowledge; or
Has been determined by the Missouri Department of Agriculture to be a qualified family member.
A Farm Owner is “an individual (including an entity that is disregarded, for tax purposes, as separate from the individual) who owns farmland and disposes of or relinquishes use of all or some portion of such farmland" as follows:
- A sale to a beginning farmer; or
- A lease or rental agreement not exceeding ten years with a beginning farmer; or
- A crop-share arrangement not exceeding ten years with a beginning farmer.
A Qualified family member is “an individual who is related to a farm owner within the fourth degree by blood, marriage, or adoption and who is purchasing or leasing or is in a crop-share arrangement for land from all or a portion of such farm owner’s farming operation.”
For more information on the program, requirements, additional documents and more, visit the Missouri Department of Agriculture Beginning Farmer Tax Deduction Program.
