Supporting Innovation in Agriculture Act of 2025

Bill Number

H.R. 1705

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-02-27: Referred to the House Committee on Ways and Means.

Last Updated

2025-10-04T08:05:48Z

AI-Generated Summary

Purpose

The Supporting Innovation in Agriculture Act of 2025 aims to encourage investment in advanced farming technologies by providing a tax credit for equipment and systems that improve the production of specialty crops (such as fruits, vegetables, and nuts). It focuses on technologies that make farming more efficient, reduce waste, and support sustainable practices, particularly through precision agriculture (using data and tools to optimize farm inputs like water and fertilizer) and controlled environment agriculture (indoor or enclosed farming with controlled conditions like lighting and humidity).

Key Provisions

• Tax Credit Amount and Eligibility: Establishes a 30% investment tax credit under new Internal Revenue Code (IRC) Section 48F for "qualified investments" in innovative agricultural technology projects. The credit applies to the cost basis of eligible property placed in service during the tax year.
• Qualified Property: Includes depreciable (eligible for tax write-offs over time) tangible items like equipment, machinery, systems, and components used in these projects, as well as software or computer systems. Property must be newly constructed, reconstructed, or acquired for original use by the taxpayer.
• Innovative Agricultural Technology Project: Defined as systems placed in service before December 31, 2035, primarily for producing, storing, processing, or packaging specialty crops using:
• Precision agriculture: Technologies like GPS mapping, sensors, drones, AI software, and variable-rate applicators to reduce inputs (e.g., seeds, chemicals, water), optimize pest control, and improve harvest efficiency.
• Controlled environment agriculture: Indoor systems with technologies such as climate control (heating/cooling), lighting, irrigation, nutrient delivery, robotics, automation, and data analytics to maintain optimal growing conditions.
• Special Rules:
• Prevents "double dipping" by denying the credit for projects funded by certain federal grants (e.g., under farm or environmental programs).
• Applies rules similar to existing energy investment credits for coordination with other tax benefits.
• Flexibility Options: Taxpayers can elect to receive the credit as a direct payment (even if they owe no taxes) or transfer it to another party for cash, making it accessible to non-profits or startups.
• Effective Date: Applies to property where construction begins after January 1, 2025.

Significant Changes to Existing Law

• Adds a new Section 48F to the IRC, inserting it after the clean electricity investment credit (Section 48E), creating a dedicated incentive for agricultural innovation similar to credits for renewable energy or manufacturing.
• Expands elective payment (Section 6417) and transferability (Section 6418) rules to include this credit, allowing broader access beyond traditional corporate taxpayers.
• Updates conforming sections (e.g., Sections 46, 49, 50) to integrate the credit into the overall investment credit framework, ensuring it interacts properly with depreciation rules and basis adjustments (reductions in the property's tax basis to avoid over-benefiting).

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) will need to administer the credit, including verifying eligibility and handling payments/transfers, potentially increasing administrative workload but offset by promoting economic growth in agriculture.
• On Citizens and Businesses: Farmers and agribusinesses investing in tech could save significantly on taxes (up to 30% of costs), lowering barriers to adopting efficient tools and potentially increasing yields or reducing environmental harm (e.g., less water/chemical use). This may benefit consumers through more stable or affordable specialty crop supplies.
• On International Relations: Minimal direct impact, though enhanced U.S. agricultural competitiveness could indirectly strengthen trade positions for specialty crops.
• Broader Economic Effects: Likely to spur innovation and job creation in rural areas and tech sectors, but could reduce federal tax revenue in the short term (estimated billions over a decade, depending on adoption).

Main Stakeholders Affected

• Farmers and Producers: Especially those growing specialty crops, who gain tax incentives to modernize operations.
• Agricultural Technology Companies: Manufacturers and developers of precision or controlled environment tools (e.g., drone makers, AI software providers) will see increased demand.
• Taxpayers and Investors: Eligible entities (including partnerships or individuals) can claim, pay, or transfer credits; non-eligible taxpayers may face indirect revenue effects.
• Government Entities: IRS for enforcement; Department of Agriculture (via referenced programs) for overlapping grants; rural communities benefiting from economic boosts.

Notable Legal, Constitutional, or Political Implications

• Legal: Aligns with existing IRC structures for investment credits, reducing litigation risk; definitions allow the Treasury Secretary flexibility to expand eligible technologies, promoting adaptability without frequent legislative updates. No conflicts with anti-double-dipping rules.
• Constitutional: Neutral; uses Congress's taxing and spending powers under Article I to incentivize private investment, with no apparent free speech, due process, or equal protection issues.
• Political: Supports bipartisan agricultural priorities (introduced by a diverse group of representatives), emphasizing rural innovation and sustainability amid climate challenges. Could influence future farm bills by setting a precedent for tech-focused incentives, potentially bridging urban-rural divides.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Kelly, Mike [R-PA-16]

Cosponsors (21)

Rep. Thompson, Mike [D-CA-4], Rep. Miller, Max L. [R-OH-7], Rep. Panetta, Jimmy [D-CA-19], Rep. Tenney, Claudia [R-NY-24], Rep. Riley, Josh [D-NY-19], Rep. LaMalfa, Doug [R-CA-1], Rep. Hayes, Jahana [D-CT-5], Rep. Bynum, Janelle [D-OR-5], Rep. Moran, Nathaniel [R-TX-1], Rep. Valadao, David G. [R-CA-22], Rep. Harder, Josh [D-CA-9], Rep. Evans, Dwight [D-PA-3], Rep. Tokuda, Jill N. [D-HI-2], Rep. Schrier, Kim [D-WA-8], Rep. Salinas, Andrea [D-OR-6], Rep. Carter, Earl L. "Buddy" [R-GA-1], Rep. McDonald Rivet, Kristen [D-MI-8], Rep. McBath, Lucy [D-GA-6], Rep. Carey, Mike [R-OH-15], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Vasquez, Gabe [D-NM-2]

Recent Actions

• 2025-02-27: Referred to the House Committee on Ways and Means.
• 2025-02-27: Introduced in House
• 2025-02-27: Introduced in House

Bill Versions

• Supporting Innovation in Agriculture Act of 2025 — issued 2025-02-27 — PDF (11 pages)