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Agricultural & Farming R&D Tax Credit
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single-year credit for agricultural sciences comapny: $1.45M of raw materials/6 on-staff ag engineers

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amount qualified businesses can offset payroll taxes per year

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average percentage of total expenses that typically qualify

Agricultural & Farming R&D Tax Credits

The diversity and constant progression of the agriculture and farming industry has made it one of the most important sectors in the world. Recent geopolitical tensions have highlighted just how important food security is, and the technological developments happening in agriculture are a source of exciting innovation — from processes to boost yields to alternative packing techniques to different strategies.

Yet despite the level of innovation happening in agriculture, many companies fail to realize that they can claim back a portion of their expenses through research and development tax credits, a government initiative to encourage this kind of activity. Many assume that R&D tax credits are meant for more typically tech-focused areas, such as information technology or pharmaceuticals. Then there are the organizations that are aware they can make claims, but don’t receive the full amount they’re entitled to due to misunderstandings.

The good news is that successfully applying for R&D tax credits comes down to the nature of the activities you carry out and not the technical qualifications of your team. As long as you’re carrying out operations that solve problems and drive forward the future of the country, you have a good chance of meeting the eligibility criteria. Now, let’s run through the tests used to determine whether a firm can qualify.

Qualifying Agricultural Activities for Research and Development Tax Credits

The farming sector is on a constant quest to make land go further and produce better, stronger crops. This is a resource-intensive process that requires plenty of research and trials into finding solutions, so federal and state tax credits should play an important role in making this innovation possible.

Tax credits make sense for those involved in various stages of the farming process, from manufacturers of fertilizer and creators of livestock feed to consultancies that work with farmers.

The following activities all qualify:

  • Creating new strains of plants, crops, and livestock (or new hybrids)

  • Developing new farming techniques that aim to improve yield or efficiency (or both)

  • Evaluating and implementing these methods
Researching different types of fertilizers

  • Finding ways to reduce diseases among crops

  • Creating new systems for irrigation

  • Developing new cultivation techniques

  • Finding new methods to reduce diseases or pests

  • Improving techniques for harvesting

  • Investigating new equipment that could make harvest cycles more efficient

  • Developing new feeds for livestock, or new techniques for feeding

  • Researching disease-resistant livestock

  • Creating automated processes

  • Making other kinds of innovative methods or products

  • Designing biosecurity practices such as disinfection and cleaning

  • Optimizing waste treatment and management

  • Improving the efficiency of harvesting

  • Experimenting with different techniques for breeding

  • Creating technologies for gene transfer

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