Farm to Food Donation Tax Credit

What is the Farm to Food Donation Tax Credit?

A tax credit is available to taxpayers that produce a food commodity and donate it to a registered Iowa food bank or food pantry or an Iowa emergency feeding organization.

Who can claim the Farm to Food Donation Tax Credit?

Individuals and businesses that produce and donate a food commodity may claim this tax credit. If the claimant is a pass-through entity (partnership, S corporation, limited liability company, estate, or trust) that is not subject to tax, the credit is generally allocated to the entity’s owners or beneficiaries based upon their pro rata share of earnings from the entity.

What is the value of the Farm to Food Donation Tax Credit?

The tax credit is equal to 15% of the value of the food commodities donated in the tax year as reported on authorized receipts to the Department and valued according to the federal guidelines for charitable contribution of food under the Internal Revenue Code section 170(e)(3)(C), or $5,000, whichever is less.

What is a qualifying food commodity?

The donated food commodity must be produced by the taxpayer and must be “apparently wholesome food”, meaning food that meets all quality and labeling standards imposed by Federal, State, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. The donated food may not be damaged, out of condition, or unfit for human consumption. A food commodity that meets the requirements for donated foods pursuant to the Federal Emergency Food Assistance Program satisfies this requirement.

How do I value my food donation?

The value of the donation is specified by the donor and must reflect the market value of the food at the time of the donation using the guidelines set forth in IRS regulation 1.170A-13(b).

To which taxes does the Farm to Food Donation Tax Credit apply?

The Farm to Food Donation Tax Credit can be applied to corporate income and individual income taxes.

Can the value of the donated food also be claimed as an itemized deduction for Iowa income tax?

No, the value of the donation for which the tax credit is claimed cannot be included as a charitable contribution on the Iowa tax return, even if the donation may be included as a charitable contribution on the Federal tax return.

How does a taxpayer claim the Farm to Food Donation Tax Credit?

Taxpayers must first receive an authorized food organization receipt when they make their donation to the registered Iowa food bank, food pantry, emergency feeding organization.

For tax years beginning before January 1, 2022: Taxpayers must send all their authorized food organization receipts to the Department, postmarked by January 15 of the year following the tax year for which the credit is requested. Once the Department verifies the amount of the tax credit using the authorized receipts, a tax credit certificate is mailed to the taxpayer which may be used to make a tax credit claim on the taxpayer’s Iowa tax return.

For tax years beginning on or after January 1, 2022: Taxpayers report eligible donations from their authorized food organization receipts and calculate their tax credit using the IA 178 Farm to Food Donation Tax Credit (41-167) form, then submit the IA 178 with their Iowa tax return. Taxpayers are no longer required to receive a tax credit certificate from the Department prior to claiming the tax credit.

Are these tax credits refundable?

Credits are not refundable. Any credit in excess of the tax liability may be carried forward for up to five years.

Where in the Code and Administrative Rules of Iowa can I find more information about the Farm to Food Donation Tax Credit?

Iowa Code Sections 190B.101 through 190B.106 (program description); Section 422.11R (individual income tax); and Section 422.33 (30) (corporate income tax).

Iowa Administrative Rules 701-304.51 (individual income tax) and 701-501.45 (corporate income tax).

Search for these sections of the Iowa Code and Iowa Administrative Rules at the website for the Iowa Legislature, www.legis.iowa.gov.

What is the Farm to Food Donation Tax Credit?

A tax credit is available to taxpayers that produce a food commodity and donate it to a registered Iowa food bank or food pantry or an Iowa emergency feeding organization.

What is the value of the Farm to Food Donation Tax Credit?

The tax credit is equal to 15% of the value of the food commodities donated or $5,000, whichever is less.

What is a qualifying food commodity?

The donated food commodity must be produced by the donor and must be “apparently wholesome food”, meaning food that meets all quality and labeling standards imposed by Federal, State, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. The donated food may not be damaged, out of condition, or unfit for human consumption. A food commodity that meets the requirements for donated foods pursuant to the Federal Emergency Food Assistance Program satisfies this requirement.

How does an Iowa food bank or food pantry or Iowa emergency feeding organization register with the Department of Revenue?

The Department has an online registration tool: Registration for Food Banks and Food Pantries. Organizations can also email the Department for registration assistance at foodbanksupport@iowa.gov. Once an organization is registered, IDR will provide the organization with their authorized food donation receipts.

What does a participating food organization need to provide to qualified donors?

An authorized food donation receipt for each qualifying donation must be provided to the donor to enable them to claim the tax credit.

What records do participating food organizations need to keep and provide to the Department?

In addition to issuing the authorized food donation receipts to the taxpayers making the donations, a spreadsheet which tracks the issued food donation receipts will also need to be maintained. This spreadsheet will need to be submitted to the Department no later than January 15 each year through GovConnectIowa.