Feb 14, 2021

$13M in tax credits for water, sustainability available to Pennsylvania farmers

Pennsylvania Agriculture Secretary Russell Redding reminds farmers to apply by March 1 for $13 million in tax credits for measures to improve soil and water quality.

Tax credits are available through Pennsylvania’s nationally recognized Resource Enhancement and Protection Program (REAP), which was expanded under the PA Farm Bill.

“Taking care of the soil and water is an economic imperative for our farms,” Redding said in a news release. “REAP tax credits are just one element of our strategy to support farmers as they feed our future and grow a viable, sustainable Pennsylvania farm economy.”

REAP is a Pennsylvania tax credit program for agricultural producers who implement best management practices (BMP) or purchase equipment that reduces nutrient and sediment runoff, enhancing soil and improving the quality of Pennsylvania’s waterways. Farmers may receive up to $250,000 in any seven-year period, and spouses filing jointly can use REAP Tax Credits.

The most common projects approved are for no-till planting and precision ag equipment, waste storage facilities, conservation plans, Nutrient Management Plans, and protecting animal heavy-use areas, like barnyards. Cover crops that help soil retain water, carbon and nutrients, and planted buffers that keep sediment out of streams are also commonly funded projects. Farmers may receive REAP tax credits of 50 to 75 percent of the project’s eligible out-of-pocket cost. Farmers whose operation is in a watershed with an EPA-mandated Total Maximum Daily Load (TMDL) can receive REAP tax credits of 90 percent of out-of-pocket costs for some projects.

Almost 350 farms in 54 Pennsylvania counties were approved for REAP tax credits in 2019-20. Tax credits can be used in conjunction with other funding sources such as the Environmental Quality Incentive Program (EQIP), the Chesapeake Bay Program or Conservation Excellence Grants to help install BMPs. In 2019-20, applicants used $5.5 million in other funding to pay for projects receiving REAP tax credits.

REAP applications are reviewed on a first-come, first-served basis. Baseline eligibility includes compliance with the PA Clean Streams Law and the Pennsylvania Nutrient and Odor Management Law.

Private investors may act as project sponsors by providing capital in exchange for tax credits. Any individual or business subject to taxation by Pennsylvania through personal income tax, corporate net income tax, the bank shares tax or others is eligible to participate in REAP.

Since the program began in 2007, REAP has awarded tax credits to more than 5,500 projects totaling over $100 million. Private investments in REAP have also contributed to the conservation projects, which in total are worth nearly $250 million.

More information about REAP, including the 2020-21 application packet and program guidelines, is available at agriculture.pa.gov.

For more information about the PA Farm Bill and investments to support Pennsylvania agriculture, visit agriculture.pa.gov or follow the department on FacebookOpens In A New Window and TwitterOpens In A New Window.