For Trent Walker, the Iowa Beginning Farmer Tax Credit sits in the background of a challenge he knows well. The cost of land makes starting out daunting, and access to a lease often depends on an older farmer stepping aside. Walker, 30, who grew up near Spencer and now farms small corn and soybean fields near Dickens, said opportunities typically arise only when a landowner retires and chooses a younger tenant.
Walker calculated that buying ground was unrealistic, with prices around $15,000 an acre making an 80-acre parcel roughly $1.2 million. Renting became the practical path. A relative of his wife retired and offered them fields to lease, a break he says many beginners depend on. He and his wife, Jessika, now balance off-farm jobs with their row-crop operation, using family machinery to avoid heavy equipment costs.
The Iowa Beginning Farmer Tax Credit under scrutiny
For nearly twenty years, Iowa has tried to widen that access through a state tax incentive. The Beginning Farmer Tax Credit, created in 2007 and administered by the Iowa Finance Authority, provides credits to landowners who lease farmland or equipment to qualifying beginners. Applicants must live in Iowa, be at least 18, have farm-operations knowledge, and hold a net worth of $901,000 or less. Unlike federal definitions, the state program places no cap on years of farming experience.
Researchers from Indiana University, Loyola University Chicago, and American Farmland Trust describe Iowa’s program as the largest of its kind, with thousands of lease contracts and more spending than any similar state initiative. Yet their analysis raises questions about whether the credit changes statewide trends or simply subsidizes arrangements that would have occurred anyway.
New farmers can’t make ends meet
Using federal tax filings to track farm income and expenses, the study found the program increased the number of Iowa operators reporting farm income by 0.7 percent compared with what would have been expected without it. Iowa spent $58.3 million during the study period, which researchers estimated at slightly more than $100,000 for each additional operator associated with the credit.
The analysis concluded the credit lifted the number of farm owners leasing land by about 17 percent and total leased acres by roughly 49 percent relative to a no-program scenario. Even so, the state’s farm population remains older, with an average operator age of 57 compared with 44 for beginners in 2017 data used in the study. Researchers found little evidence the credit lowered the average age of operators.
Nationally, most emerging producers lean on off-farm work. In 2022, nearly three-quarters of beginning farmers reported a primary occupation outside agriculture, compared with 58 percent of all U.S. producers. Walker and Jessika mirror that pattern. He serves in the Iowa National Guard, works 35 to 40 hours weekly in hog barns owned by his father-in-law, and runs a seed dealership, while she works in a medical office. They say it took about three years before their farm could operate without cash from other jobs.
The Iowa Finance Authority said the findings highlight the limits of any single program amid forces like consolidation, land values, succession planning, and shifting farm economics. The agency said it reviews research and stakeholder input to improve effectiveness and acknowledged that broader demographic trends are influenced by many factors beyond one policy.
The limits of tax credits
Several states have adopted credits to spur land transfer and ease entry for new producers. Researcher Julia Valliant, a co-author of the study in Applied Economic Perspectives and Policy, characterized such policies as experimental and needed, given high costs and barriers to succession.
Between 2015 and 2025, states including Colorado, Minnesota, Nebraska, Ohio, Pennsylvania, and Wisconsin offered incentives to lease or transfer land and assets to beginners. In Iowa, Practical Farmers of Iowa staff say land access is the top barrier, especially for small-scale growers whose leases yield limited income for landowners. They argue the program could better support small-acre operations.
On the ground, access often follows relationships. Around Dickens, Walker said leases typically stay with the same operator until a landowner retires, so openings are scarce and reputation matters. Another beginner, Chris Anderson, a fifth-generation farmer who started in 2019, rents 95 acres from his grandmother under a family succession plan, yet still relies on off-farm income as an agricultural insurance adjuster, while his wife teaches.
Iowa allows relatives to lease to one another through the program and sets a higher net-worth threshold than some neighboring states. A survey by Indiana University with American Farmland Trust found 44 percent of participants had already been renting with the same counterparty before enrolling. About half of surveyed beginners and landowners suggested they might have enrolled to do what they intended to do anyway. One study author said the credit may formalize existing relationships without necessarily generating new ones, and that broader eligibility can make it less likely to induce arrangements that would not have occurred.
The Iowa Finance Authority said there is room to strengthen the program. During the last legislative session, a proposal would have raised the cash rent credit from 5 percent to 10 percent, added incentives for below-market rents and longer terms, and created a credit for qualifying sales to beginning farmers. The bill did not advance, but the agency said such changes could expand access and support longer transitions.
What comes next
The study assessed outcomes through 2017. Since then, lawmakers have continued to adjust the Iowa Beginning Farmer Tax Credit, even as participation has waned. The Iowa Finance Authority reported assisting 153 beginning farmers in fiscal 2025, below a target of 278.
A 2025 Iowa Department of Revenue evaluation pointed to a competing tax benefit. Starting with tax year 2023, retired farmers can elect to exclude eligible rental income or deduct certain capital gains from farm asset sales. If they take that option, they cannot participate in the credit. The evaluation found the lease-income exclusion often exceeds the value of the tax credit, a shift the authority said has reduced participation.
Neighboring states have tried different tools. Minnesota, Ohio, and Pennsylvania offer incentives for sales of land and other farm assets to beginners. Nebraska provides a one-time income tax credit up to $500 for completing an approved financial management course and requires a written succession plan for family leases.
American Farmland Trust officials frame land access as part of a broader transition of farmland as older producers retire or die. They argue no single policy will solve the problem and urge a mix of approaches, from tax credits to conservation easements. How, and to whom, land transfers in the coming years will help shape the nation’s food systems and rural communities.
Land access hurdles slow rise of next-gen cattle producers also examines how rising land costs and succession patterns affect younger operators’ ability to build viable farm businesses.