Pennsylvania HB 242: An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in tax credits relating to beginning farmers, further providing for scope of article, for definitions, for beginning farmer management tax credit and for approval of tax credit.

Bill Text

PRIOR PRINTER'S NOS. 161, 1485 PRINTER'S NO. 1720
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 242
Session of
2025
INTRODUCED BY FRIEL, KHAN, McNEILL, GIRAL, BARGER, HOWARD,
HADDOCK, PASHINSKI, SANCHEZ, HILL-EVANS, PIELLI, FREEMAN,
ZIMMERMAN, GREEN AND WEBSTER, JANUARY 17, 2025
AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES,
MAY 14, 2025
AN ACT
Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
act relating to tax reform and State taxation by codifying
and enumerating certain subjects of taxation and imposing
taxes thereon; providing procedures for the payment,
collection, administration and enforcement thereof; providing
for tax credits in certain cases; conferring powers and
imposing duties upon the Department of Revenue, certain
employers, fiduciaries, individuals, persons, corporations
and other entities; prescribing crimes, offenses and
penalties," in tax credits relating to beginning farmers,
further providing for scope of article, for definitions, for
beginning farmer management tax credit and for approval of
tax credit.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 1801-H of the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, is amended
to read:
Section 1801-H. Scope of article.
This article relates to the tax credits to owners of
agricultural assets who sell [or rent] agricultural assets to
beginning farmers.
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Section 2. The definitions of "department" and "lease" in
section 1802-H of the act are amended to read:
Section 1802-H. Definitions.
The following words and phrases when used in this article
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Department." The Department of [Community and Economic
Development] Agriculture of the Commonwealth.
* * *
["Lease." A written agreement between parties for the lease
of real property on which farming occurs.]
* * *
Section 3. Sections 1803-H and 1804-H(a) of the act are
amended to read:
Section 1803-H. Beginning farmer management tax credit.
(a) General rule.--An owner of agricultural assets and a
beginning farmer may each take a credit against the tax due
under Article III for the sale [or rental] of agricultural
assets to [a] the beginning farmer in the amount approved by the
department. An owner of agricultural assets [is] and a beginning
farmer are eligible for allocation as determined by the
department of a tax credit equal to[:
(1) five percent of the lesser of the sale price or the
fair market value of the agricultural asset, up to a maximum
of $32,000; or
(2) ten percent 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 per year.] 5% of the lesser of the
sale price or the fair market value of the agricultural
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asset, up to a maximum of $50,000 per farm or agricultural
asset.
(b) Application.--
(1) The tax credit may be claimed only after approval
and certification by the department and is limited to the
amount stated on the certificate issued under section 1804-H.
(2) An owner of agricultural assets and a beginning
farmer must apply to the department for approval of a tax
credit, in a form and manner prescribed by the department.
The application shall:
(i) identify the beginning farmer who has been
certified by the department under paragraph (3) and to
whom the agricultural assets are sold [or rented]; and
(ii) specify whether the beginning farmer is a
brother, sister, ancestor or lineal descendant of the
applicant.
(3) A person may apply to the department for
certification that the person is a beginning farmer for
purposes of this article. The application shall be in a form
and manner prescribed by the department and shall require
that the applicant provide:
(i) Projected earnings statements to demonstrate the
profit potential for the farming conducted by the
applicant.
[(ii) Verification that the farming conducted by the
applicant will be a significant source of income for the
applicant.]
(iii) Verification that the applicant will, if
certified as a beginning farmer by the department, notify
the department if the farmer no longer meets the
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certification and eligibility requirements within the
three-year certification period, in which case
eligibility for tax credits ends.
(iv) Verification that [the applicant is not engaged
in farming by means of a joint business venture.] the
applicant is an individual, or if engaged in farming by
means of a joint business venture, that each individual
who is a member of the joint business venture meets the
definition of a beginning farmer.
(iv.1) Verification and documentation of Federal
gross income from a