Farming & Agriculture R&D Tax Credits

Research & Development Tax Credit for the Farming & Agricultural Industry

Getting more out of less land generates R&D tax credits for American farms

The Agriculture industry is one of the most diverse and dynamic sectors in the U.S. From farming to livestock to new packing techniques, agronomists are continually developing new processes, strategies, and solutions to increase yields and drive success across the vertical.

Many agricultural organizations aren’t aware that their operations qualify them for government-backed, research and development incentive programs, assuming that innovation tax credits are only reserved for more technologically-driven enterprises. Even agribusinesses that do participate in the R&D tax credit program still fail to capitalize on all of the R&D tax credits available to them. The Internal Revenue Code doesn’t require PhDs and white lab coats for eligibility. Instead, the program legislation focuses on the nature and results of specific operations to reward companies that conduct activities designed to solve problems. Let’s take a close look at the four tests a development effort must pass to qualify for research tax credits.

Designing, Improving and Innovating

In its quest to find new ways to get more from the same land, or produce stronger, more durable crops, the agriculture industry devotes extensive time and resources to finding solutions that feed both America and the world. These federal and state tax credits apply not only to the farmers that find ways to innovate but also to all the companies that consult and collaborate with our farmers and ranchers. Companies that can qualify in the agriculture industry include farm equipment developers, seed and plant companies, fertilizer manufacturers, livestock feed developers, and many others.

Let’s look at some of the specific activities that may qualify for R&D tax credits:

• Developing unique solutions to irrigation challenges
• Designing new farm harvesting equipment or automating harvesting functions
• Development of unique greenhouse environments to strengthen growing conditions
• Development of new breeding techniques for livestock or fishing hatcheries
• Designing new soil additives to enhance crop growth or durability
• Experimentation with new technologies to enhance yield or drive production
• Development of new bio-fabrication technologies
• Development of environmentally friendly pesticides
• Plant hybridization efforts to increase durability, taste and disease resistance
• Experimentation to increase shelf life for crops
• Design and development of new feeding processes
• Development of new or improved packaging to enhance transportability and shelf life