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Committee reviews S.323 tax exclusions for small farms and transfer-clawbacks
Summary
Legislative counsel outlined S.323 proposals to exclude small net farm profits (≤$10,000) and certain capital gains on farm real estate when buyers continue farming, with a clawback if the buyer later develops the land. Counsel flagged significant administration and tracking challenges and recommended consulting the Department of Taxes.
Legislative counsel Kirby Keaton told the Agriculture committee on Feb. 17 that S.323 would exclude specified farm-related income from Vermont personal income tax rather than treat it as a deduction or credit. "This type of income will be left off of a person's tax return entirely, would not be, even recorded there," Keaton said, describing the measure in Section 4 as an exclusion for small net farm profit provided that a taxpayer's net farm profit did not exceed $10,000 in the taxable year.
Keaton said the bill also proposes excluding adjusted net capital gain from the sale of real estate that is part of a farming operation if the buyer continues using the real estate for farming and is related to or was an employee of the farming operation. That carve-out would include a clawback: "the buyer that purchased real estate pursuant to this subdivision shall be subject to the tax imposed by this…
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