10 Tax Credits for Agriculture / Farming

[Julio Gonzalez]

For those that own farms or ranches, there are many tax credits available. I’ve summarized that top 10 below.

• 5G Wireless Farm Program Income: As cellular companies are trying to expand their 5G network, this is a great opportunity for those with land to contract a lease with cellular companies to result in passive income.
• RD Tax Credit Study: This tax credit is a federal benefit that saves companies money for implementing activities such as improvement, design or development of software, processes, formulas or products. There are tax credits available specifically for those in the Agribusiness industry.
• Cost Segregation Study: A cost segregation study is a strategic tax planning tool that separates the assets that have a shorter useful life and can be depreciated over 5, 7 and 15 years from the residential rental property or nonresidential real property that are depreciated over 27.5 and 39 years, respectively. By accelerating your depreciation schedules, you reduce your taxable income which in turn increases your operating cash flow.
• Conservation Easements: Property owners can take a charitable deduction for contributions of a qualified real property interest to a qualified organization exclusively for conservation purposes
• Solar Incentives: Tax deduction for up to 26% of the cost of a solar energy system
• ESG Farming Incentives: Implementation of environmentally friendly practices.
• Florida Sales Tax Exemption: New machinery, parts, etc. are exempt from sales tax.
• Florida Farm Green-Built Incentive: For building sustainable “green” buildings that are environmentally friendly and are considered LEED certified.
• Employment Retention Farm Credits: For the first time, agriculture is eligible for the ERC if gross receipts dropped 50% in 2020 or 20% in 2021 as compared to the same quarter in the previous year.
• Farm Fertilization Federal Tax Amortization Program: The IRS position is that fertilizer costs should be amortized based on the percentage of use or benefit each year.

What tax credits do you utilize on your ranch or agribusiness?