Investing in a new livestock operation or expanding an existing one requires careful planning and financial resources. Fortunately, the Livestock Modernization Act in Nebraska provides a valuable opportunity for farmers and ranchers to receive a refundable income tax credit of up to $500,000.

This significant tax credit aims to support and incentivize modernization efforts in the livestock industry, helping businesses stay competitive and thrive in an ever-evolving market. In this blog, we will delve into the details of the Livestock Modernization Act, exploring its benefits, qualifications, application process, and more.

What is the Livestock Modernization program?

The Livestock Modernization program is a valuable initiative introduced under the Nebraska Advantage Rural Development Act. It offers a refundable tax credit of up to 10% to eligible applicants who are modernizing or constructing new livestock facilities in Nebraska. This means if the amount of the credit exceeds the applicant's tax liability, the excess will be refunded to the applicant.

The program extends its support to various aspects of livestock operations, including housing, confinement, feeding, production, and waste management. To qualify for the program, applicants must meet specific requirements and demonstrate their intent to invest in the growth and improvement of their livestock operations. The program offers financial assistance to cover a portion of the estimated project investment cost, with the maximum credit amount capped at $500,000. The Nebraska Department of Revenue website offers resources on how to calculate your investment.

Qualifications and Limitations

There are several qualifications and limitations of the program to consider:

• Minimum Investment Level: A qualifying investment of at least $10,000 is required to be eligible for the tax credit. Investments below this threshold will not be considered for the program.
• Maximum Investment Amount: While there is no upper limit on the total investment, the tax credit will only be applied to the first $5,000,000 of the project's estimated investment cost.
• Eligible Projects: The funds allocated through the program can only be used for projects or facilities directly related to the production and farming of livestock. This includes various components such as buildings, fencing, waterers, manure handling equipment, waste management system upgrades, and essential equipment for livestock production and care (e.g., sunshades, fans, lighting). However, it's important to note that multi-use machinery intended for general farm use, such as tractors or ATVs, are not eligible for the program.
• Project Location: The program defines two categories of projects:
• Livestock Modernization projects can be located anywhere in Nebraska, providing flexibility for applicants in choosing suitable locations for their modernization efforts.
• Level 1 or Level 2 projects, including livestock production projects, have specific location requirements. Level 1 projects must be located outside certain designated counties, while Level 2 projects have a broader range of eligible counties. The Nebraska Department of Revenue provides detailed information on eligible locations.
• E-Verify: To be eligible for the program, applicants must provide proof of registration for E-Verify at the time of application. E-Verify helps employers confirm the work eligibility status of newly hired employees in the United States.

Applying for the Livestock Modernization Program

To apply for the Livestock Modernization program, applicants must submit a completed application to the Nebraska Department of Revenue. It is important to note there are two different applications depending on whether you have a Livestock Modernization project or a Level 1/Level 2 project. There is a non-refundable application fee of $500.

It's important to note that applications are accepted on a first-come, first-served basis. Therefore, it is advisable to apply as early as possible to secure a spot in the program.

Establishing an Application Date

To establish the application date, applicants must ensure that all questions and lines on the application are completed. The application date will be determined based on the date the last required item is submitted.

Applications filed after November 1 will be treated as applications filed on the first business day of the following calendar year. In such cases, the application must clearly indicate that it is intended for the following year, and the appropriate base year should be used for calculations.

How Lutz’s Accounting Services Can Help

The Livestock Modernization Act in Nebraska provides a valuable opportunity for farmers and ranchers to invest in the growth and modernization of their livestock operations. Through refundable tax credits, the program aims to support and incentivize projects that enhance livestock housing, production, feeding, and waste management.

By understanding the qualifications and application process, applicants can successfully navigate the Livestock Modernization program. It's important to work closely with a qualified tax professional, the Nebraska Department of Revenue, and comply with all requirements to maximize the chances of receiving the tax incentives and benefits offered by the program. If you have any questions, please contact us or learn more about our agriculture accounting services.