Cost Estimation for the Ohio Beginning Farmer Tax Credit Program

By:  Zhining Sun and Haotian Wu, Ph.D. students and Ani L. Katchova, Professor and Farm Income Enhancement Chair in the Department of Agricultural, Environmental, and Development Economics at The Ohio State University.

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On January 1, 2023, the Ohio Beginning Farmer Tax Credit Program was introduced; a program which will be in effect for five years until January 1, 2028. Like initiatives in other states, this program benefits beginning farmers in the state. The program aims to support the transition of farmland to a new generation of farmers and assist beginning farmers in accessing and acquiring farmland. The program provides nonrefundable tax credits to landowners who sell or lease agricultural assets to beginning farmers. Beginning farmers also receive tax credits for participating in financial management programs. The tax credit rate for both farmland rentals and sales is set at 3.99%. Given that the overall cap for the five-year program (2023-2028) stands at $10 million, we calculate the potential costs to the state of Ohio for the beginning farmer tax credit program related to farmland sales. Using a number of assumptions, the total estimated cost for the program will vary from $7,892,263 to $18,415,282. The beginning farmer tax credit program in Ohio has a cap of $10 million, therefore under high qualification shares and participation rates, this cap would be reached.