Supporting Innovation in Agriculture Act of 2025
- Sponsor
- Rep. Kelly, Mike [R-PA-16]
- Committees
- Ways and Means Committee (primary)
- Last action
- Feb 27, 2025
Bottom line
The bill incentivizes private investment in advanced farming technologies to boost efficiency and sustainability in specialty crop production through a significant new tax credit with flexible monetization options.
What it actually does
This bill amends the Internal Revenue Code of 1986 to establish a new 30% investment tax credit for qualified property used in innovative agricultural technology projects. These projects must primarily focus on producing, storing, processing, and packaging specialty crops using precision agriculture or controlled environment agriculture. The bill also makes this credit eligible for elective payment (direct pay) and transferability, broadening its accessibility.
Proponents argue
Proponents argue this credit will accelerate the adoption of modern agricultural practices, enhance food security, reduce environmental impact through efficient resource use, and strengthen the competitiveness of U.S. specialty crop producers by offsetting the high upfront costs of innovative technologies.
Opponents contend
Opponents might argue that tax credits, particularly at a 30% rate, are overly generous and costly to taxpayers, potentially disproportionately benefiting larger agricultural operations or distorting market competition by favoring specific technologies or farming methods over others.
The bill is concise and its core provisions are clearly laid out, making it accessible for a quick but informed review within typical legislative reading periods.
Section 2(a), new Section 48F(a) of the Internal Revenue Code
Establishment of Innovative Agricultural Technology Investment Credit
This provision creates a new tax credit, the 'innovative agricultural technology investment credit,' equal to 30% of the qualified investment made in eligible projects during a taxable year. This credit directly reduces a taxpayer's federal income tax liability.
Supporters argue
Supporters contend that a 30% credit is a strong incentive needed to overcome the high upfront costs of advanced agricultural technologies, thereby driving innovation, enhancing food security, and improving the competitiveness of the U.S. agricultural sector.
Critics contend
Critics might argue that a 30% credit is excessive and could lead to inefficient investments or benefit entities that would have adopted the technology anyway, representing an unnecessary cost to taxpayers.
Tradeoffs
This provision balances the desire to spur technological adoption in agriculture and promote sustainability against the cost to federal revenue and potential market distortions from a generous subsidy.
Section 2(a), new Section 48F(b) of the Internal Revenue Code
Definition of Qualified Investment and Property
This section defines 'qualified investment' as the basis of 'qualified property' placed in service during the taxable year. 'Qualified property' includes tangible personal property (equipment, systems, components) or software/computer systems that are an integral part of an innovative agricultural technology project, are depreciable, and whose original use begins with the taxpayer or is constructed by the taxpayer.
Section 2(a), new Section 48F(b)(3) of the Internal Revenue Code
Definition of Innovative Agricultural Technology Project
This section defines an 'innovative agricultural technology project' as an agricultural technology or system placed in service before December 31, 2035. Its primary purpose must be to produce, store, process, and package specialty crops using either precision agriculture or controlled environment agriculture.
Section 2(a), new Section 48F(d) of the Internal Revenue Code
Detailed Technology Definitions
This section provides detailed definitions for 'controlled environment agriculture' (closed, indoor systems with controlled inputs) and 'precision agriculture' (use of on-farm technology to manage inputs, optimize pest control, track harvest, and improve water conservation). It also lists specific eligible technologies under each category, such as horticultural lighting, robotics, GPS mapping, and AI systems.
Section 2(b), amending Section 6417 of the Internal Revenue Code
Elective Payment (Direct Pay) Option
This amendment allows 'applicable entities' (like tax-exempt organizations) and, for this specific credit, other taxpayers (if they elect) to treat the credit as a direct payment from the Treasury. This means entities with little or no tax liability can still receive the full value of the credit as a cash payment, rather than solely as a reduction in taxes owed.
Section 2(c), amending Section 6418 of the Internal Revenue Code
Credit Transferability
This amendment allows the innovative agricultural technology investment credit to be transferred (sold) to another taxpayer. This means a taxpayer who earns the credit but cannot fully utilize it to offset their own tax liability can sell the credit to another entity that can, providing immediate liquidity and cash flow.
This provision denies the innovative agricultural technology investment credit for property or improvements that have already received grants or payments under specific existing federal agricultural programs, such as certain grants under the Farm Security and Rural Investment Act of 2002 or payments from the environmental quality incentives program.
Section 2(a), new Section 48F(c)(2) of the Internal Revenue Code
Why it matters:This is standard legislative practice to prevent 'double-dipping' on federal incentives, ensuring that different federal support mechanisms complement rather than overlap, thereby promoting efficient use of taxpayer funds.
Case for: Supporters argue this provision is a crucial fiscal safeguard, preventing the same investment from receiving multiple federal subsidies and ensuring that federal resources are distributed more broadly across different initiatives.
Case against: No specific opposition is typically raised against anti-double-dipping provisions, as they are generally seen as fiscally responsible and fair.
Estimated impact: Prevents potentially millions of dollars in duplicate federal subsidies by ensuring investments are not funded by both this tax credit and other specified agricultural grants.
This subsection specifies that the amendments made by this Act shall apply to property the construction of which began after January 1, 2025.
Section 2(e)
Why it matters:This is standard legislative practice to define the applicability timeline of new tax provisions, providing a clear start date for the incentive.
Case for: Supporters argue this effective date provides a clear and immediate incentive for businesses to plan and initiate investments in innovative agricultural technology, encouraging prompt action.
Case against: No specific opposition is typically raised against standard effective dates, though some might argue for a retroactive date to capture recent investments or a later date to allow more preparation time.
Estimated impact: Determines the initial fiscal year of impact for the credit, affecting when federal revenue reductions and outlays will begin.