First come, first served

The new year is presenting a new opportunity for new farmers, as the Minnesota Department of Agriculture is accepting applications for their Beginning Farmer Tax Credit program. However, these funds have been going fast in recent years, and eligible candidates may have to hurry to secure their place in line.

According to Jenny Heck with the MDA during a Dec. 22 online presentation, Minnesota has had BFTC since 2018; at the time, it was the third state to implement the program, but now, that total number has increased to seven.

“Funding is pretty limited for the program right now,” Heck said.

The 2026 application period opened Jan. 1, and applications are considered on a first-come, first-served basis. By Heck’s estimation, candidates will be informed of their acceptance status anywhere between 1-12 weeks after applying. Funding for the program is secured at $4 million annually until 2030.

To eligible beginning farmers, the MDA is offering a cash lease of 10% of annual rental income to a maximum of $7,000; a share rent lease of 15% of annual rental income to a maximum of $10,000; a sales credit to 8% or 12% of the sale price to a maximum of $50,000; and a beginning farmer Farm Business Management tuition reimbursement equal to tuition paid to a maximum of $1,500.

The credit can come from the rent or sale of farmland, livestock, facilities and machinery, and while the credits are non-refundable, they can be carried forward by asset owners for up to 15 years. There are no restrictions on how long property has to be owned or rented prior to the credit application.

Beginning farmers who are eligible for the tax credit program must be either looking to enter the farming industry or have started farming within the last 10 years. They must be a Minnesota resident who is buying or renting as an individual, not a business or LLC,

while providing the majority of the labor and management on a farm located in Minnesota. Farming experience and knowledge are required, and candidates must have a net worth that does not exceed the limit, which was $1,042,000 in 2025.

Finally, an applicant must be enrolled in or have completed an approved FBM program, a list of which can be found on the MDA website.

“State colleges are probably the most popular version, but we also have quite a few other organizations — nonprofits (and) U of M (University of Minnesota) — as well as private instructors… who are part of our approved Farm Business Management instruction,” Heck said.

Eligible asset owners can be in-state or out-of-state individuals, trusts, LLCs, partnerships, S-corps, or other qualified pass-through entities, although they cannot be an equipment dealer, livestock dealer, or similar entity that sells agricultural assets for profit. They can claim the tax credit for as many years as the beginning farmers they work with are eligible, and they cannot be directly related to the agricultural asset owner — except in the case of a farmland sale. If renting and selling to the same person, the asset owner can fill out one application instead of multiple.

With leases, there is a funding priority for multi-year leases with a 2- or 3-year term. The beginning farmer must apply every year for the tax credit, while the asset owner applies on the lease’s first year. A tax credit approved in in the first year of the lease will have funds reserved for the second and third years. Applications need to be submitted by July 17.

The sales credit is normally 8% of the agricultural sale price, but as a new feature in 2026, the amount increases to 12% if the beginner farmer is also considered a limited land access farmer; these farmers must not own any farmland, must not rent land from a relative by blood or marriage and must not have a lease term over three years.

For the sales credit, each seller can submit their own application, although married couples have to submit one. The value of a property’s home must be subtracted from the sale amount, but other buildings, like sheds, can be included. Applications can be submitted as soon as the purchase agreement is ready, even if it is dated 2025; all sale applications are due Nov. 2, but Heck warns that funds may run out before then.

“We ran out of funds (for 2025) in late January 2025, which is wild,” she said. “The year before, it was April, and years before that, we didn’t run out of money ever, so this has been a big change to have this limited funding. I would anticipate this would be the same this year — if not sooner, since there were so many people turned away last year.”

Candidates for out-of-pocket FBM tuition cost reimbursement — in the form of a tax credit — can apply without their asset owner. Individuals can apply for this credit for up to three years.

“This tax credit to reimburse their tuition comes from a separate pool of funds,” Heck said. “It does not run out when we spend all the asset owner tax credit money.”

Applicants for FBM reimbursement can also request a waiver, but Heck warns the MDA can be strict about them.

“This is part of the state law for the program,” Heck said. “You need to have a 4-year degree in agriculture or finance or something related to farm business management, or maybe you are one of these Farm Business Management providers, so maybe you are an instructor or a lender or someone in that space.”

Like sale applications, FBM applications are due Nov. 1. Settlement statements and FBM receipts need to be submitted before the end of 2026, ideally as soon as they are available.

Applications can be submitted by mail or online via the MDA website; because applications are prioritized by the order in which they are received, Heck recommended online applications because of their digital timestamp. Mail delays could hurt an applicant’s chances through no fault of their own.

“In 2027, a year from now, we will likely be only doing an online application,” Heck said. “I know that can be a big change, so just know that’s coming. We haven’t started the software or anything yet, but I will be certainly looking for feedback when we know more.”