Alabama farmers to receive tax incentive for installing irrigation

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.