State Tax Credit and Incentive Programs Boost the Agriculture Industry

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.

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