HB 1019
In CommitteeHouse
Tax incentives for farmers
Concerning tax incentives for farmers.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a 25% tax credit for qualified farmers who spend money on conservation-related purchases like equipment, feed, or soil amendments, and who participate in state conservation programs. The goal is to encourage more farmers to join conservation efforts, with the credit available from 2026 through 2035 unless extended.
- Starting January 1, 2026, farmers who meet eligibility criteria can claim a 25% tax credit on their state business and occupation (B&O) taxes for expenses incurred in the prior year on new equipment, infrastructure, seedlings, spores, animal feed, and soil amendments.
- To qualify, farmers must either receive grant funds directly or indirectly from the Washington State Conservation Commission (e.g., through a conservation district), or be enrolled in a conservation program run by the Commission or a conservation district.
- The credit can reduce tax liability to zero, but no cash refunds are given; unused credits may be carried forward for up to two years.
- Farmers must keep records (e.g., proof of grant funding or program participation) to support claims, but no formal application is required.
- The credit expires January 1, 2036, unless the legislature extends it based on evidence that it increased farmer participation in conservation programs.
Who is affected
- Qualified farmers — Farmers who buy new equipment, infrastructure, seeds, feed, or soil amendments and who receive conservation-related grant funds from the Washington State Conservation Commission or participate in its conservation programs may claim a tax credit equal to 25% of those expenses.
- Washington State Department of Revenue — The Washington State Department of Revenue will be responsible for administering the tax credit, verifying eligibility through existing records, and ensuring proper documentation is maintained by claimants.
- Conservation districts and Washington State Conservation Commission — Conservation districts and the Washington State Conservation Commission may see increased farmer participation in their programs due to the tax incentive, and will provide data used to evaluate the program’s effectiveness.
- Joint Legislative Audit and Review Committee (CLAR) — The Joint Legislative Audit and Review Committee (CLAR) will assess whether the credit increases farmer participation in conservation programs and may recommend extending the credit beyond its current expiration.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The credit directly incentivizes conservation-related spending (e.g., soil amendments, water infrastructure, equipment upgrades) that can improve soil health, water quality, and biodiversity — delivering measurable environmental benefits to Washington’s ecosystems and agricultural sustainability.
EnvironmentPeopleRef: Sec. 1(1), Sec. 2(2)By tying the credit to participation in existing conservation programs, the bill strengthens the role of conservation districts and the State Conservation Commission — supporting rural jobs, technical assistance networks, and long-term stewardship capacity.
Business & EmploymentPeopleRef: Sec. 1(2)(a), (b)The carry-forward provision (up to two years) and non-refundable but liability-reducing structure provides meaningful relief for seasonal or cyclical farms that may have high expenses in one year but lower tax liability in another — improving cash flow predictability for small-to-mid farms.
Business & EmploymentPeopleRef: Sec. 1(1), Sec. 1(3)The bill leverages existing conservation program infrastructure (e.g., conservation districts) to verify eligibility, reducing administrative burden on the Department of Revenue and encouraging interagency coordination — supporting local capacity without creating new bureaucracy.
Local GovernmentLean peopleRef: Sec. 2(4)The sunset and evaluation mechanism (via CLAR) creates accountability and a feedback loop — if participation rises, the program can be extended, allowing for evidence-based policy evolution rather than permanent, unreviewable tax expenditure.
Local GovernmentPeopleRef: Sec. 2(3)
Potential Concerns (5)
The 25% tax credit only applies to qualified farmers who receive conservation grant funds or participate in state conservation programs — a subset of farmers, not all farmers. This excludes many small and mid-sized farms that may lack access to grant funding or awareness of conservation programs, limiting the benefit to those already engaged in or connected to state conservation infrastructure.
Business & EmploymentLean industryRef: Sec. 1(2)(a), (b)The credit is non-refundable and capped at tax liability, meaning low-revenue or marginally profitable farms may not fully utilize the credit — especially if their B&O tax liability is already near zero — reducing the real-world financial benefit for the most vulnerable farms.
FinancialIndustryRef: Sec. 1(3)The state loses tax revenue without a guaranteed return on investment; the fiscal impact depends on uptake and spending behavior, and the sunset clause ties continuation to program evaluation — but no baseline funding is guaranteed, risking program termination before long-term conservation outcomes are realized.
FinancialIndustryRef: Sec. 1(1), Sec. 2(3)While no formal application is required, recordkeeping obligations (e.g., proof of grant funding, program participation) may disproportionately burden small farms with limited administrative capacity, potentially discouraging participation despite eligibility.
Business & EmploymentLean industryRef: Sec. 1(4)The credit applies only to *new* equipment, infrastructure, and inputs — not to maintenance, used equipment, or labor — favoring farms with capital reserves to make large upfront purchases, and excluding farms focused on labor- or input-intensive but low-capital models (e.g., organic, specialty crop, or beginning farmers).
Business & EmploymentIndustryRef: Sec. 1(1)
Who Is Most Affected
Small and mid-sized farms already enrolled in conservation programs (e.g., through conservation districts) are likely to benefit most — they can claim the credit on new purchases and may already have the documentation needed. However, beginning farmers or those without grant access may be excluded.
Large-scale farms with capital reserves and existing grant access may claim larger credits due to higher spending thresholds, while small farms with limited cash flow may not fully benefit — potentially widening equity gaps within agriculture.
Conservation districts may see increased farmer enrollment in their programs, boosting their outreach and technical assistance roles — but they also face added data reporting and verification responsibilities.
The state loses revenue with no guaranteed offsetting savings — but if the credit increases participation, long-term environmental benefits (e.g., reduced erosion, improved water quality) could reduce future public costs for remediation or infrastructure.
Rural communities dependent on agriculture may benefit indirectly from improved soil health and water quality, but if the credit disproportionately helps wealthier farms, rural economic inequality could increase.