Bill > HB703

This bill creates the Farmland Retention Tax Credit Program to support agricultural land preservation in Kentucky by providing tax incentives for farmers selling agricultural land to beginning or actively engaged farmers. The program offers tax credits up to 5% of the selling price, with different caps based on the type of buyer: up to $25,000 per year for sales to actively engaged farmers (with a $100,000 lifetime cap) and up to $50,000 per year for sales to beginning farmers (with a $200,000 lifetime cap). To qualify, sellers must be small businesses with 50 or fewer employees, not be farm equipment dealers or financial institutions, and cannot be closely related to the buyer. Beginning farmers must be Kentucky residents, possess necessary farming licenses, and commit to operating the farm for at least ten years. The tax credit is nonrefundable and can be claimed against state income taxes, with unused credits carrying forward for up to five years. The program includes detailed eligibility requirements to ensure the tax credit supports genuine farming operations and land transfer between generations. The program is set to sunset on December 31, 2031, after which no new applications will be accepted, though existing approved applications will continue to be honored.