An act relating to miscellaneous agricultural subjects

New Sections 1-2 add findings and intent stating that municipalities cannot regulate farming or construction of farm structures by ordinance or bylaw, explicitly overturning the Vermont Supreme Court's 2025 decision in In re 8 Taft Street DRB & NOV Appeals. Amends 24 V.S.A. 4413(d) to list specific exempted practices including required agricultural practices, backyard poultry (excluding roosters), farming meeting Required Agricultural Practices Rule thresholds, farm structures, accepted silvicultural practices, and forestry operations.

New Section 10 adds siting requirements for electric generation facilities over 50 kilowatts and energy storage facilities over 1 megawatt: applications must delineate physical disturbance limits and the presence and acreage of primary, secondary, and local importance agricultural soils. The Agency of Agriculture must appear as a party in proceedings for facilities over 500 kW (or 1 MW for storage) sited on tracts containing primary agricultural soils.

New Section 4 adds income tax exclusions: net farm profit up to $10,000 per year is excluded from taxable income; a 40% exclusion on adjusted net capital gain from sale of real estate that is part of a farming operation (capped at the lesser of 40% of federal taxable income or $350,000), available only if the buyer is related by blood, marriage, civil union, or adoption, or was an employee for at least 10 years prior to sale. Also adds exclusions for cannabis-related deductions denied under federal law and student loan interest.

New Section 5 adds a property transfer tax exemption (subdivision 29) for transfers of property that is part of a farming operation, provided the transferee continues using it as part of a farming operation and is either related to the seller or was an employee for at least 10 years. If the buyer later develops the land, the tax becomes due.

Farm-to-School Program (formerly Section 2) is modified to allow the Agency to provide contracts in addition to grants, and the individual award cap language is revised from 'no award shall be greater than 20 percent' to similar but restructured language.

New Section 8 defines 'farm kitchen operation' as an accessory on-farm business using a dedicated kitchen facility on a working farm for preparing, preserving, packaging, labeling, or storing food products derived from crops, livestock, or other agricultural goods grown or raised on the farm. Sets a $75 annual license fee.

New Section 7 amends the 'agricultural land' definition in 32 V.S.A. 3752(1) to require 25 acres minimum (exclusive of housesite), includes buffer zones required under the Required Agricultural Practices Rule, and sets income thresholds: $2,000 for parcels up to 25 acres, $75 per acre over 25, with total income requirement capped at $5,000. Adds exception for orchard lands not yet of bearing age.

New Section 6 exempts construction of improvements for accessory on-farm businesses from permitting requirements for storage or sale of qualifying products, and for preparation or processing of qualifying products provided that off-farm product sales do not exceed $250,000 annually. Does not apply to hosting events or farm stays.

Section 3 amends the Required Agricultural Practices Rule to raise the income threshold from $2,000 to $5,000 for applicability, adds specific livestock minimums (4 equines, 5 cattle, 15 swine, 15 goats, 15 sheep, 15 cervids, 50 turkeys, 50 geese, 100 laying hens, 250 broilers, 3 camelids, 4 ratites, 30 rabbits, 100 ducks, or 1,000 pounds of cultured trout) on at least 4 contiguous acres, and adds provisions for smaller farms (1-4 acres) and sub-acre operations where the Secretary determines water quality impacts exist.

Pesticide applicator licensing fees are restructured: Class A and B dealer licenses remain at $50 each, pesticide company license at $75, certification fees at $30 per category (max $120), second/third exam fee reduced to $25, private applicator at $25, and state/municipal/public education institution applicators at $30. The limitation on frequency of retaking examinations is removed.

The annual gross income threshold for a farm to be subject to the Required Agricultural Practices Rule was raised from $2,000 to $5,000, meaning more small farms are now exempt from state-level agricultural practice requirements and municipal zoning bylaws.

The right to request an administrative hearing regarding a dairy product purchase refusal was changed from the purchaser to the producer, giving farmers the ability to challenge a handler's decision to stop buying their milk.

Section 2(d) was restructured to add explicit protections for backyard poultry flocks (excluding roosters), farming meeting Required Agricultural Practices threshold criteria, and construction of farm structures as activities municipalities cannot regulate by bylaw.

The Farm-to-School Program was expanded from providing only grants to also providing contracts, allowing schools and child care providers to enter into contractual arrangements with local food producers in addition to receiving grant awards.

A new capital gains tax exclusion was added for the sale of real estate that is part of a farming operation, provided the buyer continues using it for farming and is either related to the seller by blood, marriage, civil union, or adoption, or was an employee of the farm for at least 10 years. A clawback provision applies if the buyer later develops the land.

A new property transfer tax exemption was added for transfers of farming operation real estate to related parties or employees with 10+ years of service, with a similar development clawback provision.

New requirements were added for electric generation facilities over 50 kilowatts and energy storage facilities over 1 megawatt: applications must delineate impacts on primary, secondary, and local importance agricultural soils. Siting that precludes farming on more than five acres of such soils is deemed an undue adverse effect not in the public good.

The seed law was substantially overhauled to conform to the Recommended Uniform State Seed Law. The term 'sold' was replaced throughout with 'distributed,' expanding regulatory reach. An annual registration requirement of $85 per distributor was added, along with new reporting requirements for genetically engineered seed and pesticide-treated seed. An exemption was added for interpersonal sharing of seed for home, educational, charitable, or personal noncommercial use.

The limitation on the frequency of retaking pesticide applicator certification examinations was removed, allowing unlimited retakes. New fee categories were added for state government, municipal, and public education institution applicators at $30.

A new definition of 'farm kitchen operation' was added as a category of food manufacturing establishment, defined as an accessory on-farm business using a dedicated kitchen on a working farm to prepare, preserve, package, label, or store food products derived from farm-grown goods for farm-direct sales. A $75 annual license fee was set.

New capital gains tax exclusion for farmers: either the first $5,000 of adjusted net capital gain income or 40% of adjusted net capital gain from assets held more than three years (excluding residential real estate, publicly traded securities, and non-farm depreciable property), capped at the lesser of 40% of federal taxable income or $350,000.

New exclusion of net farm profit from Vermont taxable income if the taxpayer's net farm profit does not exceed $10,000 in the taxable year.

New capital gains and property transfer tax exemption for sales of real estate that is part of a farming operation, provided the buyer continues using it as a farming operation and is either related to the seller by blood, marriage, civil union, or adoption, or was an employee of the farming operation for at least 10 years. The exemption is reversed if the buyer develops the property.

New definition of 'farm kitchen operation' as an accessory on-farm business using a dedicated kitchen facility on a working farm to prepare, preserve, package, label, or store food products derived from crops, livestock, or agricultural goods grown or raised on the farm for farm-direct sales, donation, or distribution. Farm kitchen operations are added to the definition of 'food manufacturing establishment' and subject to a $75 annual license fee.

New statutory definition of 'agricultural land' for tax purposes: land in active use to grow hay or cultivated crops, pasture livestock, cultivate trees bearing edible fruit, or produce an annual maple product, at least 25 acres in size. Includes buffer zones under the Required Agricultural Practices Rule. Presumption of agricultural use if owned by a farmer as part of the farm unit, used under a written lease for at least three years, or has produced income meeting specified thresholds ($2,000 for parcels up to 25 acres; $75 per acre over 25, capped at $5,000). Exceptions for orchard lands not yet of bearing age.

New requirement that the Agency of Agriculture, Food and Markets appear as a party in Public Utility Commission proceedings for electric generation facilities greater than 500 kilowatts or energy storage facilities greater than 1 megawatt sited on primary agricultural soils, and must provide evidence and recommendations about those soils. Applications for facilities over 50 kW (generation) or 1 MW (storage) must delineate physical disturbance limits and the presence and acreage of primary, secondary, and local importance agricultural soils.

The Farm-to-School Program was expanded from providing only grants to providing both grants and contracts. The program name 'Rozo McLaughlin' appears retained but the mechanism broadened.

In the Required Agricultural Practices Rule, section 3.1(c) was changed from requiring crops be prepared for sale or for charitable contributions allowable under 26 U.S.C. section 170(c) made to an unrelated organization, to simply requiring crops be prepared for sale or donation. This broadens which farms trigger the rule's applicability.

The accessory on-farm structure permit provision was reworded to clarify that the $250,000 threshold applies to sales of prepared or processed qualifying products that come from products NOT produced on the farm (i.e., off-farm inputs), and the inflation adjustment mechanism was removed.

The findings section changed language describing the Supreme Court decision in In re 8 Taft Street from 'reversed application of at least the past 20 years of law' to 'misconstrued the intent of the General Assembly and reversed application of the past 20 years of law,' and added 'unchecked' before 'unintended consequences.'

Seed law definitions were updated to conform to the Association of American Seed Control Officials' Recommended Uniform State Seed Law, including adding 'vegetable' to the list of seed categories where noxious weed seeds are prohibited, and changing several definitional terms from 'means' to 'include.'

The annual gross income threshold for Required Agricultural Practices Rule applicability was raised from $2,000 to $5,000, meaning more small farms would be exempt from the rule's requirements and municipal zoning bylaws.

Charitable contributions of farm crops (allowable under 26 U.S.C. section 170(c) to unrelated organizations) were added as a qualifying activity that can trigger Required Agricultural Practices Rule applicability, alongside sales.

A new eligibility criterion (f) was added: farmers who filed a 1040(F) tax form in at least one of the past two years and raise livestock on less than 1 acre or between 1 and 4 acres in municipalities lacking livestock ordinances may be subject to the RAP Rule if the Secretary determines after a hearing that significant adverse water quality impacts exist.

A new eligibility criterion (g) was added: persons with a prospective business or farm management plan approved by the Secretary describing how the farm will meet threshold requirements may be subject to the RAP Rule.

The $250,000 cap on off-farm product sales for accessory on-farm businesses (exempt from permit requirements) was changed to be adjusted annually for inflation using the U.S. Consumer Price Index for All Urban Consumers, starting from fiscal year 2026.

A provision was added stating there shall be no limitation on the frequency for retaking examinations for private, commercial, noncommercial, or government applicator certifications or dealer licenses.

In milk purchasing disputes, the right to request an administrative hearing before the Secretary of Agriculture was shifted from the purchaser (handler) to the producer (farmer), giving dairy farmers a formal mechanism to challenge a buyer's refusal to purchase their product.

Seed law enforcement language was changed from 'sold, offered, or exposed for sale within the State' to 'distributed in or into the State for sowing purposes,' broadening the scope of what activities trigger seed law compliance.

The Farm-to-School Program was expanded from grants only to include contracts. The 20% per-recipient award cap now has exceptions: Farm-to-School service providers and school districts that completed mergers under specified acts may exceed the cap at the Secretary's discretion.

The Interstate Pest Control Compact (6 V.S.A. chapter 83) is repealed effective July 1, 2026, as it has ceased operations.

A new legislative finding was added stating that municipalities shall not regulate by bylaw the growing of plants and the raising of a small backyard poultry flock, excluding roosters.

Seed law definitions were substantially revised to conform to the Association of American Seed Control Officials' Recommended Uniform State Seed Law, adding new defined terms including 'agricultural seed,' 'flower seed,' 'labeling,' 'noxious weed seeds' (split into prohibited and restricted categories), 'weed seeds,' 'distribute,' 'distributor,' and 'treated.'