Row Crops R&D Tax Credits

Maximize innovation in farming. Row crop producers across the U.S. are constantly testing new practices, technologies, and sustainable methods. Many of these activities qualify for the federal R&D Tax Credit under IRC §41, with additional opportunities at the state level.

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Examples of qualifying activities in Row Crops production

Seed and Planting Trials Testing new hybrids, seed treatments, or planting methods
Soil and Fertility Research Optimizing fertilizer blends, stabilizers, or cover crops
Irrigation and Water Management Experimenting with drip systems, moisture sensors, or scheduling
Pest and Disease Programs Field trials of herbicide and pesticide mixes or biological controls
Precision Agriculture Using GPS, drones, or software for variable‑rate inputs
Harvest and Storage Testing new drying, aeration, or storage technologies
Sustainability Projects Conservation tillage, carbon sequestration trials, regenerative practices

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What qualifies as R&D in Row Crops Farming?

To qualify, activities must:

Pursue a permitted purpose such as a new or improved product, process, or technique
Address technical uncertainty about capability, method, or design
Follow a process of experimentation through field trials, side‑by‑side testing, or modeling
Be technological in nature, grounded in agronomy, biology, chemistry, or engineering

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Qualified Research Expenses (QREs)

The IRS allows several categories of Qualified Research Expenses (QREs):

Expense Type

Examples in Row Crops

Eligibility Notes

Wages

Agronomists, farm managers, trial coordinators

Direct, supervisory, and support roles qualify

Supplies

Seed, fertilizer, prototypes, field sensors

Must be consumed in the research process

Software / Cloud

Data analysis tools, yield mapping platforms

Eligible if used for qualified research

Contract Research

University or lab field trials

65% of eligible costs may be claimed

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Roles commonly involved in qualifying activities

Agronomists and crop scientists
Farm managers and field trial coordinators
Precision‑ag specialists and data engineers
Agricultural engineers working on irrigation, machinery, or storage systems
University and research partners

What does not qualify

Routine planting and harvesting without experimentation
General management, marketing, or administrative tasks
Applying already proven methods at scale
Land acquisition or capital improvements not tied to research

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Compliance and Documentation

§174 Update

Following the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025, §174 now allows immediate expensing of domestic research expenses for tax years beginning on or after January 1, 2025. Taxpayers may also elect optional amortization under new §174A. Foreign research expenses must still be amortized over 15 years. This is separate from the §41 credit but impacts overall tax planning.

Documentation requirements remain unchanged. Maintain clear records of:

Trial designs and hypotheses
Field layouts, soil data, and yield data
Statistical comparisons and conclusions
Employee time and wage tracking
Strong documentation supports the IRS 4‑part test and strengthens audit readiness

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Frequently Asked Questions

Do farmers qualify for the R&D Tax Credit?

Yes. Farmers and agribusinesses can qualify if they engage in systematic testing or trials that resolve technical uncertainty, not routine operations.

What expenses can be claimed?

Wages, supplies, cloud software, and a portion of contract research directly related to qualified R&D activities.

Which crops are eligible?

Common row crops such as corn, wheat, soybeans, and cotton can qualify when growers test new methods or technologies.

What activities do not qualify?

Routine farming, post‑discovery production, and non‑technical tasks such as sales or general management.

How much can row crop farmers typically save?

Savings vary by farm size and scope of activities. Industry reports suggest many row crop operations see $50,000 to $200,000 in annual credits when research activities are properly documented.

How should farmers document research?

Maintain side‑by‑side trial data, soil and yield records, equipment logs, and employee time allocations to support claims under IRS audit guidelines.