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Committee reviews farm tax changes: $10,000 net‑farm exclusion, capital‑gains carve‑out and current‑use clarification
Summary
The committee discussed changes to income tax and current‑use rules: a proposed exclusion of up to $10,000 of net farm profit from taxable income, a capital‑gains exception for certain intra‑family or employee sales with a 10‑year continuing‑use requirement, and a request to allow donated crops to count toward current‑use qualification.
On April 23 the Senate Agriculture Committee reviewed proposed farm tax provisions that would alter both current‑use qualification and state taxable income calculations for farmers.
Committee counsel described a proposal that would reduce state taxable income by the amount of a taxpayer's net farm profit to the extent such net profit did not exceed $10,000 for the taxable year (a $10,000 exclusion). Counsel said this appears as a subtraction from federal adjusted gross income in the draft (see committee draft pages summarized in discussion).
The draft also contains a carve‑out for adjusted net capital gain on the sale of farm real estate when the buyer continues to use the real estate as part of the farming operation and is related to the seller by blood, marriage, civil union or adoption, or is an employee of the farming operation who worked at least 10 years prior to the sale. Committee counsel said the provision was drafted by the committee tax attorney (Kirby Keaton) and that the effective date in the draft is 01/01/2025.
Separately, committee members discussed current‑use (use‑value appraisal) criteria for agricultural land. Counsel said some farms that donate crops asked to count donated value toward the income thresholds used to qualify parcels for current‑use status; counsel cited prior testimony from Paul Ralston on that point. Counsel and members discussed whether donated crop value can be treated as income for current‑use qualification and asked staff to follow up.
Committee members asked staff to send the draft language to Paul Ralston and to confirm the details with the tax attorney before advancing the bill; no formal vote was recorded during the discussion.
