A bill to create an enhanced income tax credit for the implementation of certain best management practices is getting a second chance in Virginia’s General Assembly.
After the proposal was left in a House committee earlier this year, Del. Tony Wilt, R-Broadway, filed legislation Monday that would create a new incentive for farmers to do projects if they’re not interested in participating in grant funding.
“I think it’s a great idea and a great opportunity,” Wilt said during an interview Tuesday. “This gives another tool in a farmer’s toolkit.”
The bill was first introduced during the 2020 session under House Bill 1642. The legislation passed the Finance Committee, 18-4, but never made it to the House floor for consideration.
Seeking a second go, Wilt filed HB 1763 to create an enhanced tax credit that would equal 75% of the first $100,000 spent in implementing certain BMPs, and each amount would be consistent with the rate offered for each eligible practice under the Virginia Agricultural BMP Cost-Share Program.
BMPs are practices approved by the Virginia Soil and Water Conservation Board providing significant improvement to water quality in Virginia’s streams and rivers.
Practices include livestock and poultry waste management, soil erosion control, nutrient and sediment filtration and detention, nutrient management and pest management. According to the proposed legislation, a detailed list of the most recently approved BMPs will be published annually by the Department of Conservation and Recreation prior to July 1.
“These are all things that led to water improvement,” Wilt said.
Through Virginia’s Agricultural BMP Tax Credit Program, the state offers a set reimbursement rate to those who participate.
The goal of the program is to encourage voluntary installation of BMPs that address Virginia’s nonpoint source of pollution water quality objectives, according to the Virginia Agricultural Best Management Practice Tax Credit Program.
Wilt’s bill would add that beginning in tax year 2021, a tax credit for 25% of expenses would apply for all other agricultural best management practices that are not eligible for the enhanced credit rate, while increasing the maximum amount of expenses to which one can apply the 25% credit to $100,000.
The amount of the enhanced credit shall not exceed $75,000 — an increase to the existing $17,500 limit, according to the bill.
Wilt said in a press release that the existing cost-share program was not ideal for many farmers and that legislators need to continue finding and creating solutions, such as the enhanced tax credit proposal.
“We have got to get serious about this and we can’t lay it on the backs of farmers,” he said.
Along with the tax credit bill, Wilt is also joining Del. Wendy Gooditis, D-Clarke, to pursue the implementation of a Dairy Margin Coverage Premium Assistance Program.
Wilt said in a press release that the Federal Dairy Margin Coverage Program under the Farm Bill acts as an insurance policy to protect against low milk prices. Challenges, however, arise from paying the initial premiums to participate in the program.
Through the bipartisan legislation, aid would be available for small to midsize dairy farms to allow them to participate. In exchange, the farm will need to be under a nutrient management or resource management plan to ensure best practices are being followed.
“Rockingham County has far more dairies than any locality in the Commonwealth and therefore we cannot afford to lose our dairy industry and the positive economic impact it has on our community,” Wilt said in the press release. “The pandemic has only added to the challenges facing these farmers, but their ability to successfully participate in the general pandemic assistance programs has been limited. I look forward to working with Del. Gooditis and other legislators to support this crucial sector.”