By Scout Nelson
In 1999, the Nebraska Legislature launched the Beginning Farmer Tax Credit Act, now known as the NextGen program, designed to ease the daunting capital requirements faced by new crop and livestock producers.
This program facilitates connections between landowners and aspiring farmers, offering tax incentives to promote land access for the next generation of agricultural producers.
Under NextGen, landowners receive refundable income tax credits when they lease land to qualified beginning farmers. These farmers, in turn, are required to complete a financial management course, supported by a $500 tax credit to offset the course cost, and benefit from a personal property tax exemption for three years.
Julia Valliant and Marie O’Neill, researchers at Indiana University’s Sustainable Food Science research group, conducted a survey funded by the USDA across several states, including Nebraska, to evaluate the effectiveness of tax credit programs for new farmers.
The survey's findings from 150 Nebraska respondents reveal both successes and ongoing challenges.
While the NextGen program is generally well-regarded and effective in initiating farmer-landlord relationships—with 28% of Nebraska participants starting or continuing a lease with their existing landlord or tenant—70% of these new farmers still face significant hurdles in accessing land.
About half of the NextGen leases resulted in reduced rental rates for beginning farmers, indicating the program's role in easing initial financial burdens.
The transition from leasing to owning remains a critical gap, with only 5% of NextGen leases leading to asset sales from landowners to new farmers. The researchers suggest that an additional income tax credit for land sales might encourage more landowners to sell to beginning farmers.
According to the survey, a significant portion of participating landowners indicated that such an incentive would likely influence their decision to transfer land.
As the NextGen program continues to evolve, it remains a crucial tool in supporting the future of farming in Nebraska by making agricultural entry less prohibitive and fostering sustainable farming practices.
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Categories: Nebraska, Education, Government & Policy