Indiana's robust and diverse agriculture industry touches many facets of our lives. From our food and drinks to our toothpaste and fuel, many of us depend on the products grown and raised by farmers. To support the more than 94,000 Hoosier farmers, I took action during the legislative session to provide them with some tax relief and weed out confusion surrounding a common tax issue that pops up when buying equipment.
With farming, you need the right tools for the job, and those tools aren't cheap. For instance, a new row crop tractor can cost over $400,000, and the attachments – of course – cost extra. A used tractor can cost around $200,000, and the 7 percent sales tax would add another $14,000 to the purchase. That's why this session, I authored legislation, which was ultimately included in Senate Enrolled Act 419, clarifying and expanding the sales tax on agriculture equipment.
Currently, state law offers several exemptions from sales and use tax relating to agricultural production. According to the Indiana Department of Revenue, the exemptions are limited to purchases of animals, feed, seed, plants, fertilizer, pesticides, fungicides, and other tangible personal property and agricultural machinery, tools, and equipment to be directly used in the direct production of food or commodities that are sold either for human consumption or other production. To be tax exempt, the property must be integral and essential to the production process.
However, farmers often face confusion as to whether certain equipment, like a large mower used primarily for mowing fields, pastures and side ditches, would qualify for the sales tax exemption.
With the new law, we are providing certainty for farmers in these situations by making it clear that the equipment will be exempt from sales tax if it's predominately used in the production of ag products and is also filed on a business personal property return. With this much-needed clarification to current law, more equipment could qualify for the exemption and that means farmers can keep more of their hard-earned money. Hopefully, this savings leads to farmers investing it back into their operations, and trickles down to mean lower prices for consumers.
In my freshman year as a legislator, I was on a mission to work on the state level to preserve prime farmland and support hardworking farm families. If we can keep the costs associated with farming down, then we can keep farmers doing what they do best – feeding the world.
Our farmers, like the rest of the nation, are battling inflation. Rising costs are hitting their bottom lines and helping them keep more of their hard-earned dollars will go a long way in allowing them to continue to operate. Indiana's economy greatly depends on this sector and as a fourth-generation farmer, I understand the challenges with feeding the nation. When the ag industry is strong, we all benefit.
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State Rep. Kendell Culp (R-Rensselaer) represents House District 16,
which includes portions of Jasper, Pulaski, Starke and White counties.
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PHOTO CAPTION: State Rep. Kendell Culp (R-Rensselaer) in the House Chamber addresses fellow House members during the 2023 legislative session. In his freshman year as a state lawmaker, Culp authored a new law further cutting taxes for Hoosier farmers.
