The US Senate recently voted to extend a new tax incentive for the donation of food to charities as part of the Pension Reform Bill that will generate an estimated more than $250 million in new private sector food donations over the next 24 months.

For the first time in the history of the United States, all business entities – including farms, small businesses, and restaurants – will receive a tax incentive to help in the fight against hunger in their communities.  Under previous tax law, only C corporations, generally larger companies, were eligible for the enhanced deduction for donations of food.

The new law means that through 2007, small businesses, farmers, ranchers and restaurateurs have a real incentive to give food for hunger relief and can deduct from their taxes the value of donated food equal to the basis of donated items plus one-half the fair market value, or two times the basis, whichever is less.  The Joint Committee on Taxation estimates that more than $250 million in new food will be donated for food banks and other charities through this change.  This is a great step forward to help ensure that our food banks have enough food available to meet growing requests for assistance.

Click on this link to see how this act could benefit your farm, restaurant or business.  Obviously, you will need to consult you tax expert to fully realize the benefits given your unique situation.