Incentives Watch: Iowa Focuses on Agricultural Tax Incentives

Iowa has been busy enacting various agriculture-related tax incentives recently. In H.B. 599, the tax credit used to encourage the transfer of agricultural assets to qualified beginning farmers has been increased. Taxpayers that lease Iowa agricultural land subject to an “agricultural assets transfer agreement,” now receive a tax credit of 7 percent (previously 5 percent) of the gross amount paid to them under a cash lease and 17 percent (previously 15 percent) of the amount paid from crops or animals sold under a commodity share lease, reports a Bloomberg BNA Weekly State Tax Reportarticle. The credit, known as the “agricultural assets transfer tax credit,” is capped at $50,000 for the taxpayer.

The legislation also creates a new custom farming contract credit, the article notes. To receive the credit, the taxpayer must enter into a contract for up to one year to pay a qualified beginning farmer at least $1,000 in cash and make all management decisions that substantially contribute to, or affect production of, crops or livestock.

Companies operating photobioreactors got a boost by another piece of Iowa legislation, H.B. 632, reports another article in Bloomberg BNA’s Weekly State Tax Report. Real estate used in the production of algae to be harvested as a crop for animal feed, food, nutritionals, or biofuel production is classified as “agricultural property,” for valuations established on or after Jan. 1, 2013.

In order to qualify as “agricultural property” the real estate must be an enclosed pond or land containing a photobioreactor, which is a device used to cultivate the algae.

For more information about the various tax credits and incentives available in Iowa, check out Bloomberg BNA’s Credits and Incentives Portfolios.

In other developments . . .

The Strafford Superior Court in New Hampshire held that the education tax credit program, which provides a credit for businesses donating to scholarship organizations, has been held to violate the no-aid clause of the New Hampshire Constitution by allowing the scholarship funds to be applied toward tuition at a religious school, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

Follow us on Twitter at: @BBNATax .
Join Bloomberg BNA's State Tax Group on
LinkedIn .