Enhanced Tax Deductions and Credits

National Legislation

Protecting Americans From Tax Hikes: Path Act of  2015

Update! In December 2015, Congress signed into law permanent enhanced tax deductions for donating food, now available to any business entity, not just large C corporations. This new legislation is expected to spur increased donations from farms and smaller retailers and restaurants. Learn more about the Path Act of 2015.

Previous  National Legislation

In 1976, Congress enacted Internal Revenue Code, Section 170e3  as an incentive so that qualified businesses—namely C Corporations—can take an enhanced tax deduction for fit and wholesome food inventory donated to qualified 501(c)3 nonprofit organizations that serve people experiencing poverty and hunger. These businesses can deduct food production costs of the donated food and as an enhancement, half the difference between the cost and full fair market value of food donated. This is a permanent incentive for C Corporations; Congress has historically granted other Corporations, such as sole proprietors, S Corporations, and LLCs the same benefit on a temporary basis, through the end of 2014. For a more detailed explanation of enhanced tax benefits with examples, visit Food Donation Connection.

Maryland Legislation

Senate Bill 249: Farmer Donations Tax Credit

Members of Montgomery County Food Council’s Food Recovery Working Group and other food recovery advocacy groups in the state fostered MD State Senate Bill 249 that allows farmers in six counties including Montgomery County to obtain tax credit for donating food to a non-profit organization. Details: 50% value of food donation or 75% value of certified organic produce up to $5,000 per year. This is a five year pilot program.

Update! SB249 – Farmer tax credit for donating produce – made it all the way to the last day of session and just never made it up for the final vote.  It passed the Senate and was in the House, even made it past 2nd reader, but ran out of time to bring it up for 3rd reading and passage. Advocates will try again next session.

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