This bill establishes a new tax credit (as part of the general business tax credit) for domestically produced agriculture.
Specifically, the bill allows a tax credit for the lesser of (1) 25% of domestically produced agricultural commodity expenses multiplied by the ratio of such expenses to total agricultural commodity expenses (excluding expenses for agricultural commodities that cannot feasibly be produced domestically), or (1) $100 million. (Conditions apply).
To qualify for the tax credit, a business’s average expenses (over three years) for domestically produced agricultural commodities must exceed a certain percentage of total agricultural commodity expenses (excluding expenses for agricultural commodities that cannot feasibly be produced domestically). The required percentage is 50% for 2026 and increases by 5% each year until it reaches 85% for tax years beginning after 2033.
Under the bill, agricultural commodities include
horticultural, viticultural, and dairy products;
livestock and livestock products (excluding live animals);
poultry and bee raising products; and
farm-raised fish products.
In addition, the general business tax credit limit based on a business’s tax liability is calculated separately for the domestically produced agriculture tax credit, and the credit is generally limited to 50% of a business’s net regular tax liability.
Finally, domestically produced agriculture tax credit amounts in excess of such limitation may be carried forward for 10 years (rather than the 20 years allowed for other business tax credits).
