By Victoria Dee
Some Alabama farmers could see a break on their taxes thanks to a new tax credit. This credit allows farmer to count certain costs associated with irrigation, including fuel conversions, equipment and reservoirs, on their income taxes.
Qualification
Only qualified irrigations systems or reservoirs are eligible for the tax credit. Producers must have filled out an annual information report with the Alabama Department of Agriculture and Industries to be eligible.
“Producers completing and submitting an irrigation questionnaire is the first step to properly seeking an income tax credit from the Alabama Department of Revenue,” said Brittney Goodrich, an Alabama Extension agricultural risk management and economics specialist.
What Can Farmers Claim?
Eligible taxpayers can claim one credit for qualifying equipment purchased and installed during five year periods. These periods are 2012 through 2017, 2018 through 2022 and 2023 and thereafter.
“This is a cost savings that farmers can use to buy new irrigation equipment if they are new to irrigation or to make long-awaited upgrades to existing equipment,” Goodrich said.
Producers that performed irrigation upgrades during 2019 are encouraged to complete the required irrigation questionnaire. The Alabama Department of Revenue will ultimately issue the irrigation tax to an eligible applicant.
According to Goodrich, this credit can also be an opportunity for Alabama producers to expand their irrigated acreage. Alabama has significantly fewer acres currently using irrigation than surrounding states.
“Alabama currently irrigates roughly 163,000 acres of cropland, compared to around 1.2 million in Georgia and around 1.7 million in Mississippi,” Goodrich said.
Source : aces.edu