SB1025: Bill Text

SB1025,,1 2023 SENATE BILL 1025

February 13, 2024 - Introduced by Senators Spreitzer, Agard, Roys and Smith, cosponsored by Representatives Jacobson, Considine, Tranel, Bare, Behnke, C. Anderson, Conley, Drake, Emerson, Hong, Joers, Ohnstad, Palmeri, Ratcliff, Shankland, Stubbs and Subeck. Referred to Committee on Universities and Revenue.

SB1025,,2 An Act to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30 (3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2) (dp), 71.07 (8s), 71.28 (8s), 71.47 (8s) and 93.521 of the statutes; relating to: income tax credits for beginning farmers and owners of farm assets and making an appropriation.

SB1025,,3 Analysis by the Legislative Reference Bureau

This bill creates an income tax credit for a beginning farmer who leases or purchases agricultural assets from an asset owner and uses the assets for farming and for a person whose assets are leased or sold to a beginning farmer. Under the bill, a beginning farmer is a person who has a net worth of less than $200,000 and who has farmed for fewer than 10 years. The bill defines “agricultural assets” as land assessed for property tax purposes as agricultural land or machinery, equipment, facilities, or livestock that is used in farming. The amount of the credit is equal to 5 percent of the lease amount or sales price paid by the beginning farmer to an asset owner for agricultural assets for the taxable year and 5 percent of the lease amount or sales price received by the asset owner from a beginning farmer for agricultural assets for the taxable year. The beginning farmer may also claim a credit equal to 5 percent of the amount the farmer paid for improvements on agricultural assets consisting of land and facilities. The maximum amount that a claimant may receive in any taxable year is $75,000 and maximum amount of the credit for all claimants in any taxable year is $5,000,000.

Under the bill, in order to claim the credit, both the beginning farmer and the asset owner must submit an application to the Department of Agriculture, Trade and Consumer Protection. The beginning farmer must submit a business plan with the beginning farmer’s application and provide a description of the beginning farmer’s education, training, and experience in the type of farming in which the beginning farmer uses the leased or purchased agricultural assets.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

SB1025,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB1025,1 Section 1. 20.835 (2) (dp) of the statutes is created to read:

SB1025,,6 20.835 (2) (dp) Beginning farmer and farm asset owner tax credit. A sum sufficient to pay the claims approved under ss. 71.07 (8s), 71.28 (8s), and 71.47 (8s).

SB1025,2 Section 2. 71.05 (6) (a) 15. of the statutes is amended to read:

SB1025,,8 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g).

SB1025,3 Section 3. 71.07 (8s) of the statutes is created to read:

SB1025,,10 71.07 (8s) Beginning farmer and farm asset owner tax credit. (a) Definitions. In this subsection:

SB1025,,11 1. “Agricultural assets” means agricultural land or machinery, equipment, facilities, or livestock that is used in farming.

SB1025,,12 2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.

SB1025,,13 3. “Asset owner” means a person who meets the conditions specified in s. 93.521 (3).

SB1025,,14 4. “Beginning farmer” means a person who meets the conditions specified in s. 93.521 (2).

SB1025,,15 5. “Claimant” means a beginning farmer who files a claim under this subsection or an asset owner who files a claim under this subsection, except that, for a beginning farmer, “claimant” means the following:

SB1025,,16 a. For partnerships, except publicly traded partnerships treated as corporations under s. 71.22 (1k), “claimant” means each separate partner.

SB1025,,17 b. For tax-option corporations, “claimant” means each separate shareholder.

SB1025,,18 c. For limited liability companies, except limited liability companies treated as corporations under s. 71.22 (1k), “claimant” means each separate member.

SB1025,,19 6. “Farming” has the meaning given in section 464 (e) of the Internal Revenue Code.

SB1025,,20 7. “Lease amount” is the amount of the cash payment paid by a beginning farmer to an asset owner each year for leasing the asset owner’s agricultural assets, including amounts paid under a lease agreement that results in the beginning farmer owning the agricultural assets.

SB1025,,21 (b) Filing claims. 1. Subject to the limitations provided in this subsection, for taxable years beginning after December 31, 2025, a beginning farmer may claim as a credit against the tax imposed under s. 71.02 an amount equal to 5 percent of the lease amount or sales price paid by the beginning farmer to an asset owner for the lease or purchase of agricultural assets for the taxable year to which the claim relates. The beginning farmer may also claim an amount equal to 5 percent of the amount the beginning farmer paid in the taxable year for improvements to agricultural assets consisting of land and facilities.

SB1025,,22 2. Subject to the limitations provided in this subsection, for taxable years beginning after December 31, 2025, an asset owner may claim as a credit against the tax imposed under s. 71.02 an amount equal to 5 percent of the lease amount or sales price received by the asset owner from a beginning farmer for agricultural assets for the taxable year to which the claim relates.

SB1025,,23 (c) Limitations. 1. With regard to credit claimed on the basis of a lease amount, a claimant may only claim the credit under this subsection for the first 3 years of any lease of an asset owner’s agricultural assets to a beginning farmer.

SB1025,,24 2. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

SB1025,,25 3. A claimant shall submit with the claimant’s income tax return the certificate of eligibility provided under s. 93.521 (5) (b).

SB1025,,26 4. No credit may be claimed under this subsection by a part-year resident or a nonresident of this state.

SB1025,,27 5. The maximum credit that a claimant may claim under this subsection for any taxable year is $75,000.

SB1025,,28 6. a. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on the amounts paid under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them.

SB1025,,29 b. In order to claim the credit computed under par. (b) 1., partners, members of limited liability companies, and shareholders of tax-option corporations shall meet the requirements under s. 93.521 (2) and claim the credit in proportion to their ownership interests.

SB1025,,30 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

SB1025,,31 2. If the allowable amount of the claim under this subsection exceeds the income taxes otherwise due on the claimant’s income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (dp).

SB1025,4 Section 4. 71.10 (4) (i) of the statutes is amended to read:

SB1025,,33 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s. 71.07 (3q), business development credit under s. 71.07 (3y), research credit under s. 71.07 (4k) (e) 2. a., veterans and surviving spouses property tax credit under s. 71.07 (6e), enterprise zone jobs credit under s. 71.07 (3w), electronics and information technology manufacturing zone credit under s. 71.07 (3wm), beginning farmer and farm asset owner tax credit under s. 71.07 (8s), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

SB1025,5 Section 5. 71.21 (4) (a) of the statutes is amended to read:

SB1025,,35 71.21 (4) (a) The amount of the credits computed by a partnership under s. 71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed through to partners shall be added to the partnership’s income.

SB1025,6 Section 6. 71.26 (2) (a) 4. of the statutes is amended to read:

SB1025,,37 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm), (1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, limited liability company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g).

SB1025,7 Section 7. 71.28 (8s) of the statutes is created to read:

SB1025,,39 71.28 (8s) Beginning farmer and farm asset owner tax credit. (a) Definitions. In this subsection:

SB1025,,40 1. “Agricultural assets” means agricultural land or machinery, equipment, facilities, or livestock that is used in farming.

SB1025,,41 2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.

SB1025,,42 3. “Asset owner” means a person who meets the conditions specified in s. 93.521 (3).

SB1025,,43 4. “Beginning farmer” means a person who meets the conditions specified in s. 93.521 (2).

SB1025,,44 5. “Claimant” means a beginning farmer who files a claim under this subsection or an asset owner who files a claim under this subsection, except that, for a beginning farmer, “claimant” means the following:

SB1025,,45 a. For partnerships, except publicly traded partnerships treated as corporations under s. 71.22 (1k), “claimant” means each separate partner.

SB1025,,46 b. For tax-option corporations, “claimant” means each separate shareholder.

SB1025,,47 c. For limited liability companies, except limited liability companies treated as corporations under s. 71.22 (1k), “claimant” means each separate member.

SB1025,,48 6. “Farming” has the meaning given in section 464 (e) of the Internal Revenue Code.

SB1025,,49 7. “Lease amount” is the amount of the cash payment paid by a beginning farmer to an asset owner each year for leasing the asset owner’s agricultural assets, including amounts paid under a lease agreement that results in the beginning farmer owning the agricultural assets.

SB1025,,50 (b) Filing claims. 1. Subject to the limitations provided in this subsection, for taxable years beginning after December 31, 2025, a beginning farmer may claim as a credit against the tax imposed under s. 71.23 an amount equal to 5 percent of the lease amount or sales price paid by the beginning farmer to an asset owner for the lease or purchase of agricultural assets for the taxable year to which the claim relates. The beginning farmer may also claim an amount equal to 5 percent of the amount the beginning farmer paid in the taxable year for improvements to agricultural assets consisting of land and facilities.

SB1025,,51 2. Subject to the limitations provided in this subsection, for taxable years beginning after December 31, 2025, an asset owner may claim as a credit against the tax imposed under s. 71.23 an amount equal to 5 percent of the lease amount or sales price received by the asset owner from a beginning farmer for agricultural assets for the taxable year to which the claim relates.

SB1025,,52 (c) Limitations. 1. With regard to credit claimed on the basis of a lease amount, a claimant may only claim the credit under this subsection for the first 3 years of any lease of an asset owner’s agricultural assets to a beginning farmer.

SB1025,,53 2. No credit may be allowed under this subsection unless it is claimed within the time period under s. 71.75 (2).

SB1025,,54 3. A claimant shall submit with the claimant’s income tax return the certificate of eligibility provided under s. 93.521 (5) (b).

SB1025,,55 4. No credit may be claimed under this subsection by a part-year resident or a nonresident of this state.

SB1025,,56 5. The maximum credit that a claimant may claim under this subsection for any taxable year is $75,000.

SB1025,,57 6. a. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on the amounts paid under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them.

SB1025,,58 b. In order to claim the credit computed under par. (b) 1., partners, members of limited liability companies, and shareholders of tax-option corporations shall meet the requirements under s. 93.521 (2) and claim the credit in proportion to their ownership interests.

SB1025,,59 (d) Administration. 1. Subsection (4) (e), (g), and (h), to the extent that it applies to the credit under that subsection, applies to the credit under this subsection.

SB1025,,60 2. If the allowable amount of the claim under this subsection exceeds the income taxes otherwise due on the claimant’s income, the amount of the claim not used as an offset against those taxes shall be certified by the department of revenue to the department of administration for payment to the claimant by check, share draft, or other draft from the appropriation under s. 20.835 (2) (dp).

SB1025,8 Section 8. 71.30 (3) (f) of the statutes is amended to read:

SB1025,,62 71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics and information technology manufacturing zone credit under s. 71.28 (3wm), business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k) 1., beginning farmer and farm asset owner tax credit under s. 71.28 (8s), and estimated tax payments under s. 71.29.

SB1025,9 Section 9. 71.34 (1k) (g) of the statutes is amended to read:

SB1025,,64 71.34 (1k) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (4), (5), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed through to shareholders.

SB1025,10 Section 10. 71.45 (2) (a) 10. of the statutes is amended to read:

SB1025,,66 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, limited liability company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47 (3), (3t), (4), (4m), and (5).

SB1025,11 Section 11. 71.47 (8s) of the statutes is created to read:

SB1025,,68 71.47 (8s) Beginning farmer and farm asset owner tax credit. (a) Definitions. In this subsection:

SB1025,,69 1. “Agricultural assets” means agricultural land or machinery, equipment, facilities, or livestock that is used in farming.

SB1025,,70 2. “Agricultural land” has the meaning given in s. 70.32 (2) (c) 1g.

SB1025,,71 3. “Asset owner” means a person who meets the conditions specified in s. 93.521 (3).