1998 Tax Incentive Expands Conservation on Virginia Farms
Farm Business Management Update, February 1998
By Randy Shank of the Department of Agricultural and Applied Economics, Virginia Tech
The Agricultural BMP Tax Credit was signed into law in 1996, but farmers won't see it on their financial statements until calendar year 1999. However, they should start planning now to take advantage of a new tax credit available for installing conservation practices.
The Agricultural BMP Tax Credit is a statewide incentive that gives farmers a tax break for voluntarily using Best Management Practices (BMP's) on their farmland. BMP's are sometimes natural, sometimes manmade "structures" that help control runoff leaving fields and other land and making its way to a nearby water source.
The tax credit, to be claimed when preparing 1998 state income tax forms, is 25 percent of BMP installation costs. For every $1,000 spent on conservation practices, a farmer can claim a $250 tax credit. The maximum credit an individual can receive in a tax year is $17,500, which could be claimed after $70,000 worth of practices are installed.
The BMP Tax Credit is available through local soil and water conservation districts throughout the Commonwealth. Several rules apply, most notably that the land must have a conservation plan written to address conserving soil and preserving local water quality, and the practices must be approved by a local district board prior to installation or claiming the tax credit.
For more information about this and other incentives, contact the local soil and water conservation district or the Virginia Department of Conservation and Recreation at 804-786-1712.
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