Key takeaways
- Iowa’s Beginning Farmer Tax Credit increased farmland leasing, but researchers found little evidence that it created more farms or lowered the average age of emerging farmers.
- Researchers found limits to what the tax credit has accomplished, while state officials say challenges, such as farm consolidation and an aging farm population, extend beyond any single program.
- New farmers struggle to make a living from farming, often relying on off-farm jobs even when they have access to land.
As a boy growing up in Spencer, Iowa, Trent Walker spent summers helping on his grandfather’s farm, picturing that he someday would follow in his grandfather’s footsteps and become a farmer himself.
During harvest season, he trick-or-treated at his grandpa’s grain bin site as trucks came in from the fields. He was particularly drawn to the changing seasons and how no two days were quite the same.
“I would never be able to work in a factory,” said Walker, 30. “I would just get so bored.”
With the passing years, Walker learned that access to land is one of the biggest obstacles for aspiring farmers like him. Buying land was largely out of reach. At $15,000 an acre, he calculated, an 80-acre parcel could cost $1.2 million.
Renting was more realistic so he waited for a window of opportunity.
That window opened when a relative of his wife, Jessika, retired and offered them land to rent in Dickens, not far from where he grew up in northwest Iowa. Walker said beginning farmers often need an established farmer stepping aside and choosing to give someone younger a start.
“The biggest bridge, I think, is the guy retiring willing to give the young guy the opportunity,” Walker said.
For nearly two decades, Iowa has offered a financial incentive for farm owners to do just that.
The state’s Beginning Farmer Tax Credit rewards farm owners for leasing farmland and equipment to qualified beginning farmers. Created in 2007, the program places no limit on years of farming experience, unlike the U.S. Department of Agriculture, which defines a beginning farmer as someone who has operated a farm for 10 years or less.
To qualify, applicants must reside in Iowa, be at least 18 years old, have knowledge of farm operations and have a net worth of $901,000 or less. Researchers, who studied the program, describe Iowa’s as the biggest beginning farmer tax credit program in the country, awarding thousands of lease contracts and spending more on the incentive than any other state with a similar program.
But nearly two decades later, researchers found little evidence that leasing, as the program intended, helped create more farms or younger farmers into Iowa agriculture, raising questions about whether the program changes trends or simply subsidizes deals that were already likely to happen.
Researchers’ data analysis concluded that the tax credit increased the number of farm owners leasing land about 17% and the amount of farmland acres about 49%, compared with what likely would have happened without the program, according to researchers from Indiana University, Loyola University Chicago and American Farmland Trust, a nonprofit focused on farmland conservation and helping farmers thrive.
In spite of the findings, researchers stop short of calling the program a failure. But they admitted that it is difficult to separate the tax program from other agricultural policies and their outcomes, if any.
Julia Valliant, who co-authored the study published earlier this year in Applied Economic Perspectives and Policy, a peer-reviewed journal, said one of the biggest takeaways from the study is that more investment in emerging farmers is needed.
“Iowa gives the most money in the country to anything like this,” Valliant said. “ You know, $6 million per year, $9 million per year. And that’s a very small amount of money in the big picture for agriculture.”
New farmers can’t make ends meet
To conduct the study, researchers used federal tax forms farmers file to report farm income and expenses. They found the program increased the number of Iowa farm operators reporting farm income by 0.7% compared with what would have been expected without the tax credit. Iowa spent $58.3 million during the study period.
The program spent slightly more than $100,000 for each additional farm operator associated with the tax credit.
The state’s farm population remains considerably older, at 57 years old on average, than its beginning farmers at 44 on average, according to 2017 agriculture data used in the study. The study found little evidence that the tax credit lowered the average age of Iowa farm operators. Age was another measure researchers used to assess whether the program was changing demographic shifts among farmers in the state.
Starting a farm, however, does not necessarily mean making a living from it. Nationally, nearly three-quarters of emerging farmers reported that something other than farming was their primary occupation in 2022, compared with 58% of all U.S. farm producers, according to the most recent data.
Walker and Jessika, 29, followed a similar path. They started their own row-crop operation three years ago with two small fields, growing corn and soybeans. To avoid the cost of buying equipment, they help with her family’s farming operation in exchange for using its machinery.
Both still work off the farm. Walker serves in the Iowa National Guard and works 35 to 40 hours a week tending hogs in barns owned by his father-in-law and has a seed dealership on the side. Jessika works at a medical office as a clerk. Their off-farm income supports the couple and their four children, ages 9 to 2.
Walker said it took about three years for the farm to reach the point where it no longer needed money from their other jobs to sustain itself.
The Iowa Finance Authority, which administers the program, said the study findings reflect the limits of what any single policy can accomplish.
In an email, Ashley Jared, communications director of the Iowa Finance Authority, said: “IFA appreciates research that helps inform policy and will continue evaluating the program and stakeholder feedback to ensure it is as effective as possible in supporting beginning farmers.”
The agency added that they “recognize that broader trends such as farm consolidation and the aging farm population are complex, long-term challenges influenced by many factors beyond any single program, including farmland values, financing, succession planning and changing farm economics.”
Even as researchers question the program’s statewide impact, the tax credit remains one of several Iowa initiatives intended to support new farmers.
The limits of tax credits
Across the nation, states have introduced beginning farmer tax credits to make it easier for people to enter farming and for older landowners to transfer their operations to the next generation.
Valliant has been studying such state and national policies for several years, describing them as “experimental, “pioneering,” and ‘innovative.”
“We need them… it’s so expensive and difficult to get into farming and to help farm owners pass along the farm to a young person,” she said.
Between 2015 and 2025, Colorado, Minnesota, Nebraska, Ohio, Pennsylvania and Wisconsin offered tax credits or deductions intended to encourage landowners to lease farmland or other agricultural assets to beginning farmers.
Martha McFarland, who works with beginning farmers at Practical Farmers of Iowa, said land access is “consistently identified as the number one barrier.”
The challenge can be especially acute for smaller producers, she said, including vegetable growers who may need only five or 10 acres rather than hundreds. Because such leases generate relatively little income for landowners, she wishes the program did more to support smaller-acre operations.
“All land access is local,” McFarland said.
Walker knows these challenges too well. Around Dickens, farmland that is already rented tends to stay with the same operator until the landowner decides to make a change, often when someone retires. That leaves few openings for farmers trying to get started, making relationships with landowners especially important.
“Farming is built on relationships and years of hard work,” Walker said. “It’s not something that you can just get into day one or year one or year two … It takes years of good relationships and financial preparedness.”
Chris Anderson has something Walker and many other beginning farmers are trying to build: a family connection to farmland.
After serving in the U.S. Army and working as a civilian police officer, Anderson began farming in northwest Iowa in 2019, becoming a fifth-generation farmer. He rents 95 acres from his 93-year-old grandmother. “It’s a blessing to have any farm ground,” he said.
The family already has a succession plan. Anderson’s father plans to buy the farm from her estate, compensating his siblings, and Anderson would continue as a tenant, this time renting from his father.
But even with access to family land, making a living from farming has been difficult.
Anderson, 30, works as an agricultural insurance adjuster, and his wife is a teacher. Anderson and his wife have relied on off-farm income while getting the farm established and have not taken any income from the operation during their first four years of farming.
“The farm has to be profitable before it can pay for anything,” he said.
Though Anderson knows about Iowa’s Beginning Farmer Tax Credit, he has not spent much time learning about it or applying because his schedule keeps him busy. If his family decided to participate, the tax credit would go to his grandmother as she’s the landowner, not to Anderson.
Existing relationships between farmers and landowners do not disqualify them from participating.
Iowa allows family members to lease land to one another through the program and permits participants to have a higher net worth than some neighboring states.
The survey, conducted by Indiana University in consultation with American Farmland Trust, found that 44% of participants had already been renting farmland to or from the person they later enrolled within the tax credit program. About half of the beginning farmers and landowners surveyed may have enrolled in the tax credit to do what they would have done anyway.
“Policymakers can decide who literally collects the check, but they can’t determine who is actually going to benefit from the program,” said Justin Ross, a professor of economics and public finance at Indiana University’s Paul H. O’Neill School of Public and Environmental Affairs and one of the study’s authors.
Ross said some of the subsidized arrangements may simply have formalized relationships that were already in place.
“So many of these deals just might have been made anyway,” he said. “A question can be whether or not the tax credit is generous enough to actually induce people to do this more than they otherwise would.”
The program’s broader eligibility rules may reinforce that pattern, Ross said.
“The more relaxed [the eligibility rules] are, the less likely it truly is an actual new farmer who wouldn’t be doing this anyway,” he said.
The result, according to Ross, is a program that appears to encourage more leasing without producing a corresponding increase in successful new farm operations statewide.
Jared said the agency believes there are opportunities to strengthen the program as agriculture evolves.
During the last legislative session, she explained in an email, legislation was introduced to enhance the program, including increasing the cash rent tax credit from 5% to 10%, providing additional incentives for below-market rental agreements and longer-term leases, and establishing a tax credit for qualifying sales to beginning farmers.
While the legislation did not move forward, Jared said the proposed changes reflect the types of improvements that could encourage additional land-access opportunities while supporting longer-term farm transitions.
What comes next
The study evaluated Iowa’s Beginning Farmer Tax Credit only through 2017. Since then, lawmakers have continued to modify the program, even as participation has dropped.
The Iowa Finance Authority, which administers the tax credit, reported assisting 153 beginning farmers in fiscal year 2025, well below its annual target of 278.
A separate 2025 evaluation by the Iowa Department of Revenue identified one reason participation may have slowed.
Beginning in the 2023 tax year, Iowa’s retirement tax changes created a new option for retired farmers, allowing them to either exclude eligible farm rental income or deduct certain capital gains from farm asset sales. Making that election means a retired farmer can no longer participate in the Beginning Farmer Tax Credit program.
The evaluation said the lease-income exclusion often provides a larger tax benefit than the Beginning Farmer Tax Credit.
Jared said participation in the program has declined since Iowa’s tax code changed in 2023. Many retired landowners who choose the Farm Tenancy Income Exclusion can no longer benefit from the Beginning Farmer Tax Credit, which has reduced participation in the program, she explained.
She also said the agency is reviewing its performance targets to better reflect the current policy environment.
The evaluation also noted that several neighboring states have adopted different approaches to helping beginning farmers gain access to land.
Minnesota, Ohio and Pennsylvania, for example, offer tax incentives for selling agricultural land and other assets — such as machinery, buildings and livestock — to beginning farmers. Nebraska offers qualified emerging farmers a one-time state income tax credit of up to $500 for participating in an approved financial management class. It also requires a written succession plan when farmland is rented between family members.
Those differences raise a question the study poses — whether helping beginning farmers ultimately requires more than encouraging landowners to sign leases.
Brooks Lamb, special adviser for strategic communications at American Farmland Trust, said the access-to-land challenge facing beginning farmers is really part of a larger national problem in how American farmland transitions from one generation to the next.
“A tremendous amount of land owned by those aging and elder farmers is going to change hands in the next decade or two, simply because those older farmers are going to retire, or they are going to die,” he said.
Lamb said no single policy is likely to fix land access for beginning farmers and urged policymakers to look at a variety of tools used in other states, from tax credits to conservation easements.
The future of agriculture in the United States will be determined on how and to whom land transitions and that’s how our food systems and rural communities will take shape in the future, he said.
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