A new state tax credit is seeking to ease one of the largest barriers for prospective farmers, the price of land.
“As expensive as land is, it’s very, very difficult for a young farmer to buy land and make it pencil,” said state Rep. J Paul Brown, who supported the law.
Gov. John Hickenlooper signed the law last week and farmers could see the benefits on their 2017 taxes.
To entice older farmers to work with the next generation, the state is offering an income tax credit for 20 percent of the lease payments, up to $25,000 per tax year.
Farmers can receive this incentive for up to three years. The tax credit will be available to 100 people, with less than 10 years of farming or ranching experience, until 2020 when the pilot program expires.
“The whole idea is to encourage some young farmers to get in the business and get the experience, and then there is this incentive for older farmers to go ahead and lease to a younger farmer rather than to a corporation,” Brown said.
Tax credits are an important part of helping young farmers access land, but they are not going to solve the problem, said Kate Greenberg, western water program director for the National Young Farmers Coalition.
Nationally, farmers older than 65 outnumber those younger than 35 by 6 to 1, and so there simply aren’t enough people to take over production of all the land, she said.
“We need to create a full suite of tools that allow young farmers to access land, steward water and build viable farm and ranch businesses, while helping close the farmland succession gap,” she said.
However, this kind of tax credit can help farmers consider lease options instead of selling their land or taking it out of production, she said.
She also believes the measure will be appealing to land owners in La Plata County who want to see their land and water kept in agriculture, but face development pressures.
The tax credit is modeled after similar programs in Iowa and Nebraska, and it is designed to ease some of the risk that comes along with leasing to a younger farmer, said Jim Rubingh, executive director of Colorado Agricultural Development Authority. This authority will manage the program, and many of the details, such as how the 100 people for the program will be selected, have not been determined, he said.
“We’ll start going over those things probably this summer,” he said.
