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State Tax Credit and Incentive Programs Boost the Agriculture Industry

Rod Mauszycki
By  Rod Mauszycki , DTN Tax Columnist
(Photo illustration by Barry Falkner)

A few months ago, I was chatting with my colleague Patrick Hanlon about federal programs aimed at agriculture. For a little background, his area of expertise is in business incentive credits offered by states to encourage economic development. After talking about the Inflation Reduction Act, Patrick brought up a good point: Most of the time, we focus on federal programs and forget that most states offer incentives to businesses such as agriculture. I asked him to coauthor this article to outline the basics of state programs.

Qualifying activities for state economic development incentives are when companies hire new employees; make capital investments in real estate, machinery and equipment; and train new or current employees. There are more than 350 state tax credit and incentive programs targeting agriculture industry companies. These programs are designed to help businesses invest in their operations and improve their productivity, which ultimately benefits the local economy.

These state programs vary widely in terms of their eligibility requirements, the amount of tax credit or incentive offered, and the types of activities that are eligible for the credit or incentive. Some states offer tax credits for the purchase of new equipment or for the installation of energy-efficient systems. Other states offer incentives for the creation of new jobs or for the training of employees. Many states offer a combination of these.

In Illinois, the Agriculture Equipment Sales Tax Exemption Program provides a sales tax exemption for farm equipment. This program is available to farmers who meet certain eligibility requirements, including the requirement that they own or lease at least 40 acres of land. It helps to reduce the cost of equipment for farmers in Illinois, which can help to stimulate investment in the agriculture industry.

In Ohio, the Ag-LINK program offsets the impact of up-front costs in the agricultural industry by providing an interest rate reduction on agriculture business operation loans at eligible banks and farm credit lenders.

In South Carolina, the Rural Infrastructure Authority grant program provides grants to businesses that invest in rural areas in the state. The program is available to all businesses that meet certain eligibility requirements, including the requirement that they create new jobs in rural areas. It helps to encourage businesses to invest in rural areas in South Carolina, which can help stimulate economic growth in these areas.

In addition to the tax credit and incentive programs specifically targeted at agriculture industry companies, most of the economic development tax credits and incentive programs not targeted at agriculture companies specifically will usually apply to them when they undertake qualifying activities. For example, the Indiana Economic Development Corp. provides a wide range of tax credits and incentives to businesses that create jobs or make capital investments in Indiana. These programs are available to all businesses that meet the eligibility criteria, including agriculture industry companies.

Overall, state tax credit and incentive programs are powerful tools for supporting the growth and development of the agriculture industry. Businesses that are interested in taking advantage of these programs should consult with their state economic development agency to learn more about the specific incentives that are available in their state.

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-- DTN Tax Columnist Rod Mauszycki, J.D., MBT, is a tax principal with CLA (CliftonLarsonAllen) in Minneapolis, Minnesota.

-- Read Rod's "Ask the Taxman" column at https://www.dtnpf.com/…

-- You may email Rod at taxman@dtn.com

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Rod Mauszycki