| Summary |
The bill establishes a state income tax credit (credit) for the sale or
lease of land, crops, livestock and livestock facilities, farm equipment and
machinery, grain storage, irrigation equipment, or water used for
agriculture (agricultural assets) to certain agricultural producers for
income tax years beginning on or after January 1, 2026, but before
January 1, 2031. There are 3 different credits that may be earned by a
qualified taxpayer. For the sale of an agricultural asset to a beginning
farmer or rancher or socially disadvantaged farmer or rancher, a qualified
taxpayer may earn a credit equal to 5% of the lesser of the sale price or
fair market value of the agricultural asset up to a maximum credit of
$32,000 for one income tax year. For the lease of an agricultural asset to
a beginning farmer or rancher or socially disadvantaged farmer or
rancher, a qualified taxpayer may earn a credit equal to 10% of the gross
rental income in each of the first, second, and third years of the rental
agreement, up to a maximum credit of $7,000 for one income tax year.
For the lease of an agricultural asset to a beginning farmer or rancher or
socially disadvantaged farmer or rancher for a period of 20 years or more,
a qualified taxpayer may also earn a credit equal to 2% of the gross rental
income for each year after the first 3 years of the extended term lease, up
to a maximum amount of $2,000 per income tax year. The credit is
refundable and may not be carried forward.
To claim the credit, a qualified taxpayer must apply to the
Colorado agricultural value-added development board (board) for a credit
certificate (certificate). The board will evaluate the application and issue
a certificate if the taxpayer qualifies for the credit. If a certificate is
issued, the qualified taxpayer must attach it to the taxpayer's income tax
return and submit it to the department of revenue to claim the credit. The
board may issue rules to administer the credit.
The aggregate amount of credits issued in one calendar year cannot
exceed $2 million. After certificates have been issued for credits that
exceed an aggregate of $2 million for all qualified taxpayers during a
calendar year, any claims that exceed the amount allowed are placed on
a wait list in the order submitted and a certificate is issued for use of the
credit in the next income tax year. No more than $2 million in claims
shall be placed on the wait list in any given calendar year.
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