On Monday, April 26th, Arkansas Governor Asa Hutchinson signed into law HB1314, the Water Conservation and Development Tax Credit Enhancement Act. The measure (now Act 875), sponsored by Representative David Hillman and Senator Ricky Hill, was approved by the Arkansas House 96-0 and the Senate 34-0.
It makes significant improvements to the Water Conservation and Development Tax Credit, which helps farmers adopt water management activities including land leveling for irrigation efficiencies, surface water reservoirs, tailwater recovery systems, and other irrigation efficiency investments including flow meters and irrigation automation and control systems. This tax credit program is managed by the Natural Resources Division of the Arkansas Department of Agriculture and the Arkansas Natural Resources Commission (ANRC).
Improvements to the Water Conservation and Development Tax Credit under Act 875 and Act 563 of the 93rd General Assembly will bring about the following changes to the program.
Act 563 extended the timeframe for completing projects under this Act from 3 years to 5 years and makes the completion timeframe retroactive to credits issued back to January 1, 2017.
Act 875
- for water impoundments - tax credits were increased from $90,000 per project to $120,000 per project not to exceed 50 percent of project costs; and recipients can claim up to $18,000 per tax year for up to 15 tax years from issuance of credits.
- for surface water conversion outside critical groundwater areas - tax credits were increased from $27,000 to $35,000 not to exceed 25 percent of project costs (was 10 percent); and recipients can claim up to $18,000 per tax year for up to 15 years from issuance of credits.
- for surface water conversion inside critical groundwater areas - counties contiguous to critical groundwater areas are considered to be in critical groundwater areas, and tax credits are increased from $27,000 to $35,000 not to exceed 50 percent of project costs; and recipients can claim up to $18,000 per tax year for up to 15 years from issuance of credits.
- for land leveling - tax credits are increased from $27,000 to $35,000 not to exceed 25 percent of project costs (was 10 percent); and recipients can claim up to $18,000 per tax year for up to 15 years from issuance of credits.
- the sunset provision related to credits claimed in a given year is increased from $10,000,000 to $20,000,000
Other notes on the program:
Tax credits under this act are transferable to other taxpayers.
Approved applicants may also be entitled to a state income tax deduction in the amount equal to the project cost less the total amount of tax credits to which the approved applicant is entitled.
Flow meters and irrigation monitoring and control systems are considered eligible under this Act as surface water conversion projects.
More below:
https://www.agriculture.arkansas.gov/natural-resources/divisions/water-management/tax-credits/