Missouri lawmakers propose tax exemptions for farmland sales to beginning farmers

Missouri's House Bill 1364 aims to bolster the state's agricultural landscape by incentivizing landowners to sell or lease farmland to beginning farmers. Introduced on February 19, 2025, the bill proposes significant tax benefits for farm owners who engage in crop-share arrangements or lease agreements with new entrants in the farming sector.

At the heart of HB 1364 is a tax subtraction scheme that allows farm owners to deduct capital gains from the sale of farmland to beginning farmers from their Missouri adjusted gross income. The bill outlines a tiered deduction structure, where owners can subtract 100% of capital gains up to $2 million, gradually decreasing to 20% for gains over $5 million. This provision is designed to make it financially attractive for seasoned farmers to transition their land to those just starting out.

In addition to sales, the bill also addresses rental agreements, allowing farm owners to subtract cash rent income from their taxable income when leasing land to beginning farmers. This dual approach seeks to alleviate barriers for new farmers, who often struggle to access land due to high costs and competition.

The bill has sparked discussions among lawmakers and stakeholders in the agricultural community. Proponents argue that it will rejuvenate Missouri's farming industry by ensuring a steady influx of new farmers, while critics express concerns about potential revenue losses for the state and the long-term sustainability of such tax incentives.

Economic implications are significant, as the bill could lead to increased agricultural productivity and support rural economies. However, the Missouri Department of Revenue will be tasked with preparing an annual report to assess the financial impact of these tax subtractions, ensuring transparency and accountability.

As the bill moves through the legislative process, its success could reshape the future of farming in Missouri, fostering a new generation of farmers while addressing the pressing issue of land access. The outcome of HB 1364 will be closely watched by both supporters and opponents, as it could set a precedent for similar initiatives across the nation.