RESOURCE ENHANCEMENT AND PROTECTION (REAP)
what is reap?
- Through the Resource Enhancement and Protection (REAP) Program, farmers, landowner, and businesses earn tax credits for implementing "Best Management Practices" (BMPs) that will enhance farm production and protect natural resources.
- REAP is a first-come, first-served program – no rankings. The program is administered by the State Conservation Commission (Commission) and the tax credits are awarded by the Pennsylvania Department of Revenue.
- Eligible applicants receive between 50% and 75% of project costs in the form of State tax credits for up to $150,000 per agricultural operation.
- The tax credits can be used incrementally (as needed) for up to 15 years to pay PA state income tax. Farmers and landowners can elect to sell the tax credits after 1 year.
- Farmers can work with a sponsor that will help to finance the BMP project. The sponsor reimburses the farmer/landowner for the project installation costs and the sponsor receives the tax credits.
- Applicants can apply for proposed projects and/or completed projects.
WHAT DO FARMERS NEED TO HAVE IN ORDER TO BE ELIGIBLE FOR REAP?
- Current Plans
Agricultural operations must have a current and up-to-date:
The written plans must be on-schedule for full implementation in order to be considered
“current”. The cost of developing and implementing these plans may be included to qualify for the tax credit.
- Conservation Plan or Agricultural E&S Plan on all acres that are under managerial control at the time of application
- Nutrient Management Plan (for a CAO or CAFO) or Manure Management Plan – required of all operations that have animals or utilize manure.
- Properly Protected Barnyards
BMPs necessary to control nutrient and sediment runoff from ACAs must be fully implemented AND/OR the implementation of these BMPs must be included in the application.
- On-schedule for Full Implementation of Crop Field and other NM BMPs
An agricultural operation with uncompleted BMPs required in an Conservation/Ag E&S Plan and/or a Nutrient Management/Manure Management Plan must be following the schedule for full implementation listed in those plans.
what kinds of projects are eligible for reap tax credits?
- Tax credits for 75% of eligible costs include the following:
- Conservation/Ag E&S Plans, Nutrient Management/Manure Management Plans
- BMPs for ACAs and barnyard runoff, stream bank fencing with 50 foot forested riparian buffers, and 50 foot forested riparian buffers.
- Tax credits for 50% of eligible costs include:
- Any Commission approved BMP or equipment necessary to reduce existing sediment and nutrient concerns. Examples include: manure storage systems, alternative manure treatment practices, grassed waterways, rotational grazing systems, no-till planting equipment, cover crops, etc.
- Stream bank fencing with 35 foot riparian buffers (grassed or forested).
- No tax credit will be provided for a publicly funded portion of a project.
- The tax credit is to be returned if the practice is not maintained for the life span of the practice.
- Tax credits can only be awarded to projects completed or equipment purchased after the effective date of the Act, which is October 23, 2007, and are still within their lifespan. (See Attachment 1 of the REAP Guidelines)
What are the eligible project costs?
The following are eligible costs of a project to which a tax credit may be applied:
- Project design, engineering, and associated planning
- Project management costs, including constructing, document preparation and applications
- Project construction and installation
- Equipment, materials and other eligible project components
- Post construction expenses
- Interest payments on loans for project implementation for up to one year prior to the award of the tax credit.
REAP differs from traditional conservation programs. PA tax credits are issued after the installation of a practice or purchase of eligible equipment. State or federal cost-share portions of a project are ineligible for REAP tax credits.
- REAP tax credits can be used incrementally by the applicant for up to fifteen years. Credits are transferable, and can be sold to other taxpayers. There are individuals and corporations that wish to reduce their tax liability by purchasing tax credits. Several brokers in Pennsylvania can help arrange tax credit sales/transfers.
- Through REAP's sponsorship program, another business could help finance a project and apply for the tax credit instead of the producer.
- An accountant or other financial professional can advise farmers on the benefits of REAP for their operation.
- REAP tax credits may be sold, and there are individuals and corporations that wish to reduce their tax liability by purchasing tax credits. Several brokers in Pennsylvania help arrange tax credit sales.
The State Conservation Commission will begin accepting FY 2016 REAP applications on August 1, 2016. The FY 2016 REAP Applications and Guidelines are available for download in the "Forms" section located near the top of this page, or by contacting the Commission at (717) 705-4032.