Bill Text: MI HB6437 | 2025-2026 | 103rd Legislature | Introduced
Bill Title: Individual income tax: other; beginning farmer tax credit program; create. Creates new act. TIE BAR WITH: HB 6438'26
Sponsorship: Partisan Bill (Republican 14)
Status: (Introduced) 2026-10-28 - Bill Electronically Reproduced 10/21/2026 [HB6437 Detail]
Download: Michigan-2025-HB6437-Introduced.html
HOUSE BILL NO. 6437
A bill to create a beginning farmer tax credit program; to define the powers and duties of certain state departments and agencies; to certify farmers as beginning farmers; and to approve tax credits for the sale of certain assets by certain persons to beginning farmers.
the people of the state of michigan enact:
Sec. 1. This act may be cited as the "beginning farmer tax credit program act".
(a) "Agricultural assets" means agricultural land, livestock, facilities, buildings, and machinery used for farming in this state.
(b) "Agricultural production" means the production for commercial purposes of crops, livestock, and livestock products, including the processing or retail marketing of such crops, livestock, or livestock products if more than 50% of those processed or merchandised products are produced by the farm operator. Agricultural production includes use of land that is devoted to and meets the requirements of and qualifications for payments or other compensation pursuant to a soil conservation program under an agreement with an agency of the federal government.
(c) "Beginning farmer" means an individual who is a resident of this state and has obtained written certification from the department under section 9 confirming the individual's beginning farmer status.
(d) "Department" means the department of agriculture and rural development.
(e) "Family member" means the family of an individual as provided under section 267(c)(4) of the internal revenue code of 1986, 26 USC 267.
(f) "Farming" means the active use, management, and operation of real and personal property for the agricultural production of a farm product.
(g) "Owner of agricultural assets" means an individual, trust, or flow-through entity that is the owner in fee of agricultural land or has legal title to any other agricultural asset. Owner of agricultural assets does not include an equipment dealer, livestock dealer, or comparable entity that is engaged in the business of selling agricultural assets for profit and that is not engaged in farming as its primary business activity.
(h) "Qualified rental agreement" means a cash rental agreement for agricultural assets that are rented at prevailing community rates as determined by the department.
(i) "Share rent agreement" means a rental agreement in which the principal consideration given to the owner of agricultural assets is a predetermined portion of the production of farm products produced from the rented agricultural assets and that provides for sharing production costs or risk of loss, or both.
(j) "Tax credit" means the credit allowed under section 281 of the income tax act of 1967, 1967 PA 281, MCL 206.281.
Sec. 5. (1) Before January 1, 2027, the department, in cooperation with the department of treasury, shall develop, implement, and administer a beginning farmer tax credit program. The department shall establish and use a detailed application process to certify individuals as beginning farmers and to approve tax credits for owners of agricultural assets that sell or rent agricultural assets to beginning farmers.
(2) The beginning farmer tax credit program must satisfy all of the following:
(a) Provide that no assistance is awarded to a person under this program unless the person certifies that the person will not discriminate against any employee or against any person seeking employment by reason of race, gender, creed, color, sexual orientation, or gender identity or expression, or in violation of the Elliott-Larsen civil rights act, 1976 PA 453, MCL 37.2101 to 37.2804, which prohibits discrimination on the basis of religion, race, color, national origin, age, sex, sexual orientation, gender identity or expression, height, weight, familial status, marital status, or disability, or in violation of any applicable federal laws.
(b) Provide that an officer, director, or employee of an applicant who is a party to or has a private interest in an agricultural asset shall disclose the nature and extent of the interest to the governing body of the applicant, and may not vote on action of the applicant concerning the agricultural asset, nor participate in the deliberations of the applicant concerning the agricultural asset.
(c) Require applicants to maintain full and accurate records with respect to the agricultural asset and farming operations and ensure adequate control over related parties.
(d) Provide the department with access to records described under subdivision (c), as well as the ability to inspect all work, invoices, materials, and other relevant records at reasonable times and places.
Sec. 7. (1) If an owner of agricultural assets seeks to claim a tax credit, that owner must submit, in a form and manner as prescribed by the department, an application to the department for approval of a tax credit. The application must include all of the following information:
(a) The identity of the beginning farmer who has been certified under section 9 and to whom the agricultural assets are to be sold or rented.
(b) Whether the beginning farmer is a family member.
(c) Legal description and assessed value of the land the owner of agricultural assets will sell or rent to the beginning farmer or description of the agricultural asset to be sold or rented to the beginning farmer, or both, if applicable.
(d) A copy of the owner's federal form 1040 Schedule F for the most recent tax year. The owner of agricultural assets must demonstrate that 50% or more of the owner's income is from farming activity. An owner of agricultural assets that makes the majority of their income through equipment dealing, livestock dealing, or a comparable entity is not eligible.
(e) A copy of the sale, rental, or lease agreement, which includes the following information:
(i) The names of the beginning farmer and owner of agricultural assets.
(ii) The effective date of the agreement.
(iii) A legal description of the land and any other relevant description of the agricultural assets.
(iv) The payment details, including rental payments and schedule or purchase price of the agricultural asset.
(v) Signatures and dates from both the beginning farmer and owner of agricultural assets.
(f) A copy of a tax clearance certificate or tax status letter from the department of treasury indicating that all taxes have been paid up to the date of issuance.
(2) Subject to the limitations under this section, if the department, in cooperation with the department of treasury, determines that the applicant under this section satisfies each of the following, the department shall issue a tax credit certificate to the applicant:
(a) Is the owner of the agricultural land or has legal title to any other agricultural asset for which a tax credit is being sought.
(b) Is a beginning farmer.
(c) Is subject to taxation under part 1 of the income tax act of 1967, 1967 PA 281, MCL 206.1 to 206.532.
(d) Is not delinquent in any taxes owed to this state.
(3) A tax credit approved and certified under this section must not exceed the following:
(a) For the sale of an agricultural asset, 5% of the lesser of the sale price or the fair market value of the agricultural asset, up to a maximum of $32,000.00.
(b) Subject to subsection (4), for a qualified rental agreement of an agricultural asset, 10% of the gross rental income in each of the first, second, and third years of a rental agreement, up to a maximum of $7,000.00 per year.
(c) Subject to subsection (4), for a share rent agreement of an agricultural asset, 15% of the cash equivalent of the gross rental income in each of the first, second, and third years of a share rent agreement, up to a maximum of $10,000.00 per year.
(4) A credit under subdivision (b) or (c) must be calculated based only on gross rental income actually received or accrued, consistent with the owner's method of accounting for federal income tax purposes, during the tax year for which the credit is claimed.
(5) The tax credit certificate issued under subsection (2) must state all of the following:
(a) That the applicant is an owner of an agricultural asset.
(b) That the recipient of the agricultural asset is a beginning farmer.
(c) The maximum amount of the tax credit that may be claimed under section 281 of the income tax act of 1967, 1967 PA 281, MCL 206.281, by the owner of the agricultural asset for the applicable tax year or tax years. For a sale of an agricultural asset, the applicable tax year is the tax year in which the sale is completed. For a qualified rental agreement of an agricultural asset or a share rent agreement of an agricultural asset, the applicable tax years are the tax years in which the gross rental income attributable to the first, second, and third years of the agreement is received or accrued, consistent with the applicant's method of accounting for federal income tax purposes.
(d) The applicant's federal employer identification number or the Michigan department of treasury number assigned to the applicant.
(6) The total amount of all tax credits approved and certified under this section must not exceed $5,000,000.00 per calendar year. However, if the department, in cooperation with the department of treasury, approves a total of all credits under this section of less than $5,000,000.00 in a calendar year, the department, in cooperation with the department of treasury, may carry forward for 1 year only the difference between $5,000,000.00 and the total of all credits approved under this section in the immediately preceding calendar year or $1,000,000.00, whichever is less.
Sec. 9. (1) An individual seeking certification as a beginning farmer must submit, in a form and manner as prescribed by the department, an application to the department. The application must include all of the following information:
(a) Proof of experience in the agriculture industry or related field.
(b) Verification that the applicant has not received federal gross income from agricultural production for more than the 10 most recent taxable years.
(c) Confirmation that the applicant seeks to engage in agricultural production in this state and intends to provide the majority of the labor and management involved in production.
(d) A description of the type of farming operation the applicant will be conducting.
(e) Confirmation that neither the applicant nor their spouse is a family member of the owner of the agricultural assets from whom the applicant wishes to purchase or rent an agricultural asset.
(f) Projected earnings statements to demonstrate the profit potential for the farming conducted by the applicant.
(g) Verification that the farming conducted by the applicant will be a significant source of income for the applicant. The department may require the applicant to include crop or livestock contracts, dairy paperwork, or cash flow analysis.
(h) Verification that the applicant will, if certified under this act, notify the department within 60 days if the applicant no longer meets the certification and eligibility requirements within the 3-year certification period, in which case eligibility for tax credits ends.
(i) Verification that the applicant is not engaged in farming by means of a joint business venture.
(j) Verification and documentation as necessary to meet other eligibility requirements established by the department.
(2) If the department determines that the applicant under this section satisfies each of the following, the department shall issue a written certification to the applicant confirming the applicant's beginning farmer status:
(a) Is a resident of this state.
(b) Is seeking entry, or has entered within the last 10 years, into farming, and has not received federal gross income from farming activities for more than the 10 most recent tax years.
(c) Intends to farm land located within the borders of this state.
(d) Is not, and whose spouse is not, a family member of the owner of the agricultural assets from whom the applicant is seeking to purchase or rent agricultural assets.
(e) Is not, and whose spouse is not, a family member of a partner, member, shareholder, or trustee of the owner of agricultural assets from which the applicant is seeking to purchase or rent agricultural assets.
(f) Provides the majority of the day-to-day physical labor and management of the farm.
(g) Has, as determined by the department, adequate farming experience or demonstrates knowledge in the type of farming for which the applicant seeks assistance.
(h) Demonstrates to the department a profit potential by submitting projected earnings statements.
(i) Asserts to the satisfaction of the department that farming will be a significant source of income for the applicant.
(3) A certification issued under subsection (2) is valid for 3 years. An applicant must submit a request for renewal, in a form and manner as prescribed by the department, and provide satisfactory evidence that the individual continues to meet the requirements for certification as a beginning farmer.
Sec. 11. Beginning June 1, 2028 and each June 1 thereafter, the department, in cooperation with the department of treasury, shall submit an annual report to the chairperson of the senate finance, insurance, and consumer protection committee and senate natural resources and agriculture committee, the chairperson of the house finance committee and house agriculture committee, the director of the senate fiscal agency, and the director of the house fiscal agency concerning the operation and effectiveness of the beginning farmer tax credit program established under this act. The report must include background information on beginning farmers in this state and any other information relevant to evaluating the effect of the tax credits on increasing opportunities for the number of beginning farmers in this state. The report must also include all of the following:
(a) The number and amount of tax credit certificates issued under this program for the immediately preceding calendar year.
(b) The geographic distribution of credits issued under this program.
(c) The type of agricultural assets for which credits were issued under this program.
(d) The number and geographic distribution of beginning farmers whose purchase or rental of assets resulted in tax credits for the seller or owner of the asset.
(e) The number of beginning farmers by geographic region in each calendar year.
(f) The number and amount of credit applications under section 7 that exceeded the allocation available each year.
Enacting section 1. This act does not take effect unless Senate Bill No. ____ (request no. S06808'26) or House Bill No. 6438 (request no. H06808'26) of the 103rd Legislature is enacted into law.
