The Missouri Agricultural and Small Business Development Authority (MASBDA) will start accepting applications for the Missouri Beginning Farmer Tax Deduction Program on August 1, 2024.

Deductions for Farm Sales to beginning farmers: Farm owners can qualify for a deduction on their Missouri adjusted gross income based on income from selling or renting/leasing farmland to a beginning farmer. For farmland sold to a beginning farmer on or after August 28, 2023, farm owners may subtract from their Missouri adjusted gross income, up to the amount included in federal adjusted gross income, as follows:

First $2 million of capital gains: 100% deduction
Next $1 million of capital gains: 80% deduction
Next $1 million of capital gains: 60% deduction
Next $1 million of capital gains: 40% deduction
Next $1 million of capital gains: 20% deduction

Deductions for Rentals, Leases, and Crop Shares: Farm owners who rent, lease, or enter into a crop-share agreement (up to 10 years) with a qualified beginning farmer may also be eligible for a deduction. The deduction equals the annual income received under the agreement, up to $25,000 per year, as long as it is included in federal adjusted gross income.

Certification Process: MASBDA will issue a dated certification letter to the farm owner once both the farm owner and the beginning farmer meet the program’s requirements. Copies of this certification will also be sent to the beginning farmer and the Missouri Department of Revenue. To claim the deduction, farm owners must include the certification letter when filing their tax return using Form MO-5955. If the transaction occurred in tax year 2023, the farm owner may need to file an amended return to claim the deduction.

Disclaimer: The information provided here is for general informational purposes only and should not be construed as legal or financial advice. Always consult with a qualified tax professional or advisor to discuss your specific situation and obtain advice tailored to your individual needs. The accuracy, completeness, and timeliness of the information cannot be guaranteed, and you should rely on professional guidance when making tax-related decisions.