New tax credit available to Virginia farmers to help reduce food waste

Virginia farmers have an incentive to donate excess product to nonprofit food banks due to the Food Crop Donation Tax Credit. Approved by the Virginia General Assembly during the 2016 Session, farmers who donate edible food crops to a nonprofit food bank can receive up to a 30 percent tax credit for their donation.

“Increasing healthy food access for all Virginians helps strengthen our communities and our economy,” said Commissioner Sandy Adams. “Local growers are often faced with more product than they can sell and food banks need more fresh options. We encourage Virginia farmers to take advantage of this tax credit. It’s a win-win for everyone.”

“Sourcing food locally can help the agricultural industry,” said Leslie Van Horn, executive director of the Federation of Virginia Food Banks, which represents seven regional food banks in Virginia and more than 2,000 nonprofit food pantries and feeding programs. “It reduces food waste and helps give incentives to growers and producers to donate their bounty, but most importantly, it gives food insecure individuals across the Commonwealth access to food they need to thrive and prosper.”

Virginia farmers may apply for a tax credit equal to 30 percent of the fair market value of food crops such as grains, fruits, nuts and vegetables up to a maximum of $5,000 per farmer for a taxable year. If a farmer does not owe enough Virginia income tax to use the full amount of the credit in one taxable year, the farmer can carry over the credits to the next five succeeding taxable years or until the total amount of the tax credit has been used, whichever is sooner.

The Food Crop Donation Tax Credit cannot exceed $250,000 annually for all qualifying taxpayers. If more than $250,000 of credits is requested for the year, a farmer may receive less than the full amount of the tax credit for which he or she applied.

For the 2017 tax year, farmers who wish to participate should submit a Virginia Department of Taxation Food Crop Donation Tax Credit application, Form FCD-1, by Feb. 1, 2018. More information about the Food Crop Donation Tax Credit is available on the Virginia Department of Taxation’s website at https://www.tax.virginia.gov/food-crop-donation-tax-credit-guidelines .