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The State of Maryland will soon have a pilot food donation program creating a state income tax credit for qualified farms donating food to authorized organizations, assuming the law is signed by the Governor. The pilot program, which would go into effect July 1, 2017, will be limited to farmers in Anne Arundel, Calvert, Charles, Montgomery, Prince George’s, and St. Mary’s counties.
Many farmers currently donate farm products to organizations such as the Maryland Food Bank to ensure farm products go to those in need, and to prevent food waste. The program came about to encourage food donations to a food distribution system in Southern Maryland (Charles, Calvert, and St. Mary’s counties), providing the low-income, working poor, and unemployed populations of that region with fresh farm products. Given this is a pilot program, if successful, it could be expanded to include other regions within the state in the future.
Currently, farmers may claim a federal charitable donation for the value of the farm products donated, but no state equivalent exists. With the passage of the Maryland Food Donation Pilot Program, eligible farmers will be able to claim a credit equal to 50% of the value of the food donation (75% for certified organic produce), not to exceed $5,000 in a taxable year. The Maryland Secretary of Agriculture has the authority to increase the $5,000 limit up to an additional $5,000 in the taxable year. Further, any unused amount of the credit may be carried forward for five taxable years. No credits may be issued after December 31, 2019.
To qualify, eligible donations must be made to an organization authorized by Maryland Department of Agriculture (MDA) to act as a tax credit certificate administrator. These administrators must issue tax credit certificates to eligible farms upon receipt of an eligible food donation and provide a copy of the certificate to the Maryland Comptroller and MDA within 30 days.