By Lamonte Garber, Senior Agricultural Consultant, Chesapeake Bay Foundation

Farms throughout Pennsylvania – be they large, small or somewhere in between – will soon be able to earn valuable state tax credits in exchange for a wide variety of farm improvements.

The Resource Enhancement and Protection Act, or “REAP,” offers transferable state tax credits to farmers anywhere in the Commonwealth who install eligible soil and water conservation practices. In this column and for three more to follow, Lancaster Farming will be providing up-to-date information on how farmers can participate in the program.

This past July the General Assembly and Gov. Rendell passed REAP as part of Act 55. Since then, the State Conservation Commission and the Department of Agriculture have been working double-time to get ready for the application process. SCC staff expects that final guidelines for the program will be approved on November 14th, with applications available on December 1.

REAP tax credits provide a dollar-for-dollar reduction to a farmer’s state income tax, which is better than a tax deduction which only reduces taxable income. REAP tax credits can benefit any farmer, even those with limited tax liability. Farmers have the option to use the credits to reduce their own tax liability, (using all at once, or by spreading out for up to fifteen years) or they may choose to sell them (after one year) to another taxpayer. What’s more, businesses that partner with farms to help pay for improvements can receive the tax credits instead of the farmer.

Tax credits will be awarded only AFTER the completion or installation of a conservation practice, and only those practices or purchases dated after October 23, 2007 are eligible. While the SCC is still finalizing the list of eligible practices, barnyard improvements, grazing systems, manure management systems, no-till planting equipment and cropland erosion controls are likely to be included. Conservation and nutrient plan development are also eligible for tax credits. Most practices can earn credits covering 50-75 percent of project costs. The state can issue up to $10 million in tax credits through June 2008.

Tax credits are issued on a first-come, first-served basis. A pre-application can reserve tax credits in a farmer’s name before he or she undertakes a project. Up to $150,000 per agricultural operation is available over the life of the program.

To be eligible, farmers must have a current conservation plan that meets state erosion control guidelines. Concentrated Animal Operations will also need a nutrient management plan. Any animal concentration areas causing runoff problems (barnyards, outdoor feedlots, exercise lots, etc.) must be evaluated and improved as part of a REAP application. A farmer who will be receiving project funds from another government program may also qualify for REAP tax credits, but the tax credits cannot apply to that portion of project costs covered by government funds. All projects and equipment must meet SCC standards and be maintained for a time period specified by the SCC.

Farmers who would like to receive an information packet on REAP should send an email to REAP@cbf.org or send their name and address to Chesapeake Bay Foundation, attn: REAP, 614 North Front Street, Suite G, Harrisburg, PA 17101.

Information is also online at the CBF REAP webpage and at State Conservation Commission REAP webpage.

11/16/2007