Legislation Proposes Tax Credits for Manure Infrastructure Investments

By:Peggy Kirk Hall, , Associate Professor, Agricultural & Resource Law , Associate Professor, Agricultural & Resource Law Wednesday, April 27th, 2016

A legislative proposal to address manure infrastructure costs introduced by Rep. Brian Hill (R-Zanesville) is moving once again, receiving its third hearing before the House Ways and Means Committee on Tuesday, April 26.  The bill proposes a refundable personal income tax credit for livestock owners in Ohio who invest in facilities or equipment for manure storage, treatment, application, handling or transportation.  Rep. Hill introduced the measure last August, but it has not been on the committee's agenda since its second hearing in February.  Here are the details of the proposed legislation:

  • The tax credit would apply only to taxpayers who own livestock in Ohio on the bill’s effective date and for the entire taxable year in which claiming the credit.  The credit would not apply to former livestock owners, those who obtain livestock after the effective date or those who do not own livestock for the entire year in which claiming the credit.
  • Eligible investments would include those made between January 1, 2005 and January 1, 2020 for any costs incurred to:
  • Acquire manure handling or transportation equipment, which means any machinery, device, equipment, tool, motor vehicle, system or infrastructure improvement used primarily to move manure to or from a manure storage or treatment facility or other location, or to clean or decontaminate land or surfaces on or in which manure is deposited or stored.
  • Acquire manure application equipment, which includes any machinery, device, equipment, motor vehicle or system used to apply or inject manure into or onto soil for agricultural purposes;
  • Plan, design, excavate, construct or install a manure storage or treatment facility anywhere in Ohio, which includes any excavated, diked or walled structure or combination of structures designed to stabilize, hold or store manure.
  • The investments made must assist the taxpayer in complying with NRCS Nutrient Management Code 590 regarding manure application anywhere in the state or complying with state laws regarding the application of manure in Lake Erie’s western basin.   
  • The amount of the tax credit would be 50% of the total eligible investment, and the taxpayer would be required to spread the credit amount equally over a five year period.
  • If the taxpayer’s credit would exceed the income tax due, the taxpayer would be entitled to a refund of the excess amount.
  • The tax commissioner would be responsible for adopting rules for the tax credit, which could require the taxpayer to substantiate the amount of the investment, identify the location of the livestock or describe how the investment helps the taxpayer comply with laws regarding manure storage and application.

Several dairy farmers, the Ohio Soybean Association and the Ohio Farm Bureau testified at the April 26 committee hearing in support of the bill, highlighting the financial strains on livestock operators who install new manure storage and separation equipment.   Committee members expressed several concerns with the proposal, including the retroactivity to investments made since 2005, its application to owners of Confined Animal Feeding Operations and the Legislative Service Commission’s projected loss of tens of millions of dollars per year in state revenue due to the credit.   

Read and follow HB 297 on the Ohio General Assembly website, here.

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