Alabama farmers to receive tax incentive for installing irrigation

Alabama farmers to receive tax incentive for installing irrigation

• The bill also allows the tax credit on the development of irrigation reservoirs and water wells, in addition to the conversion of fuel-powered systems to electric power.

The Alabama Legislature, in its most recent session, passed the Irrigation Incentives Bill, providing a state income tax credit of 20 percent of the costs of the purchase and installation of irrigation systems.

The bill also allows the tax credit on the development of irrigation reservoirs and water wells, in addition to the conversion of fuel-powered systems to electric power.

The legislation, signed into law in May by Gov. Robert Bentley, provides a one-time credit, which cannot exceed $10,000 per taxpayer. The credit must be taken in the year in which the equipment or reservoirs are placed into service.

The Alabama Department of Revenue will oversee implementation of the credit and coordinate efforts with the Alabama State Soil and Water Conservation Committee.

While the incentive is welcome news for farmers, the entire state will benefit from the new law, says Richard McNider, University of Alabama at Huntsville professor and chairman of the Alabama Universities Irrigation Initiative.

“If we expand the amount of irrigated acres in this state, we will become more profitable,” says McNider. “Our studies show that if we irrigate, we can compete with Midwestern farmers.

The incentive offers an impressive return on a relatively small investment, adds Sam Fowler, director of the Alabama Water Resources Research Institute at Auburn University. Enhancing rural areas ultimately benefits the state’s budget and allows for job creation, he says.

Hard to calculate exact impact

“We don’t know how many farmers will take advantage of this incentive and what crops they will grow, so we can’t calculate the exact impact of the legislation. But, we can estimate that for every $1 of tax credit, this legislation will generate $70 to $80 of direct economic income within the first 10 years,” says Fowler.

Irrigation also could lower the state’s reliance on imported grain, he says. “With irrigation, much of the corn and soybeans used in poultry feed could be profitably produced here, creating thousands of jobs.

Alabama currently lags behind neighboring states Georgia and Mississippi in its amount of irrigated acreage. While Georgia and Mississippi each have about 1.5 million acres of irrigation land, Alabama has only 130,000 acres.

The Department of Revenue is developing rules for implementing the credit. For more information, farmers should contact the department at 334-242-1170 or visit the website,

Another new law passed by the legislature and signed by the governor protects farmers from being sued by an agritourism participant who is injured due to an inherent risk of the agritourism activity.

The law applies to U-Pick farms, farmers’ markets, livestock shows, historic agriculture displays, and farming and ranching activities.

Farmers may not be held liable if an agritourism participant is injured due to the condition of the land or water, the behavior of wild or domesticated animals, the dangers of structures or equipment used in everyday farming operations, or the failure of a participant to follow directions, obey warnings or use reasonable caution.

However, a farmer could be liable for failing to post proper warning signs, failing to properly train staff, failing to care for sick animals, or failing to make participants aware of hazardous conditions beyond the typical dangers found on a farm.

Agritourism attractions must have a warning sign posted in a visible location, such as at the entrance or near a cash register. The law stipulates the size of the lettering and the wording of the sign.

State lawmakers also passed the Farm-To-School Procurement Act, allowing schools to purchase up to $100,000 worth of unprocessed, home-grown products from local farms for use in school cafeterias.

Other new legislation that should prove beneficial to Alabama farmers include laws that discourage the theft of copper and other metals, clarifies timber harvest notification requirements, and secures funding for the Alabama Department of Agriculture and Industries.

[email protected]

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.