Agriculture Tax Credits and Tax Breaks for Farms
Opportunities for tax credits and deductions
R&D Tax Credits for Agribusiness
Taxation is one of the core issues of today’s political discussion, and the future is uncertain for many. As many taxpayers attempt to minimize their tax burden, agriculture is an often-overlooked industry which can benefit from the R&D tax credit.
The research and development tax credit is an incentive that is available federally and in most states. Many people assume that the R&D tax credit is intended for high technology industries such as software development, semiconductor design or pharmaceuticals. However, any taxpayer who is engaging in the development of new or improved products or processes is likely to qualify for the credit.
Common Examples of R&D Tax Credits for Agriculture
Agriculture is rife with activity that qualifies for the R&D tax credit.
Development of new or improved storage techniques
This can include the development of packaging to control moisture or temperature, or structural design to ensure that product doesn’t degrade (such as the clumping of grain, or unwanted molding and fermentation).
Development of new or improved conveyance systems
As material is moved throughout a process, there are often changes to the process design to improve speed/throughput, decrease material loss, or to improve the reliability of the process. Design for transport (such as trucking or refrigeration design) can also qualify.
Development of new or improved products or processes to maximize yield
As the taxpayer seeks to improve the growth or return on a crop or livestock, there are a wide variety of activities that qualify:
- Testing of new or improved planting or harvesting techniques
- Testing of new or improved chemical additives or fertilizers
- Testing of new feeds or feeding techniques to improve livestock health or growth
- Testing of new soil blends including pH, mineral content, or nutrient density, etc.
- Testing of new techniques or products to prevent disease or pest damage
Development of new or improved software
This can include software designed to aid with material tracking, land utilization, and selection of crop based on soil characteristics.
Development of new or improved irrigation technologies
This can be the development of mechanical or electrical systems, as well as software design to automate the process.
Development of new or improved techniques or equipment to minimize environmental impact
This includes techniques or equipment designed to remain compliant with evolving environmental regulations.
Meet Our Agribusiness Tax Credit Specialist
Tax Credit Director
Alex Bray, JD, LLM, MBA
Aldrich CPAs + Advisors LLP
Alex Bray is a taxation law expert as well as a licensed attorney with a Master of Laws in Taxation and an MBA. Prior to joining Aldrich, Alex was a Tax Senior at a Big Four firm where he specialized in business tax advisory and quantitative services. During his time there, Alex enjoyed connecting with…
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