Income tax; credit for donation to food banks.
The tax credit established by HB 119 seeks to create a positive impact on food security by enhancing the capacity of food banks to provide nutritious food to those in need. The bill requires that donations are made without any remuneration, thereby ensuring that the intent is purely charitable. Additionally, the tax credit is limited to a total of $2 million annually across all participants, which raises questions about its long-term sustainability and accessibility to smaller farmers.
House Bill 119 aims to incentivize Alabama farmers to donate edible farm products to qualifying food banks by offering an income tax credit. Under this bill, farmers would be eligible for a credit equal to either 15% of the value of the donated commodities or up to $5,000, whichever is lesser. This credit is designed to promote charitable food donations while also aiding farmers in managing their agricultural products, particularly those that are surplus or nearing spoilage.
Key points of contention surrounding HB 119 include its limit on the aggregate amount of tax credits and the potential bureaucratic hurdles in claiming the credits. Critics might argue that the cap could discourage large-scale food donations or lead to inequities, where only larger farms could benefit significantly. Furthermore, concerns regarding the administration of tax credits and how they will be distributed fairly among farmers of varying scales and operations are likely to emerge during debates.
This act is set to take effect on January 1, 2025, and will remain in effect until the end of the 2032 tax year unless extended or amended by future legislation. Farmers claiming the credit will need to file an informational report detailing their donations, ensuring accountability and oversight by the Department of Revenue. The process may face challenges, particularly related to ensuring fairness and meeting the expected demand for tax credits.