Tax credit for domestic farm inputs benefits big food makers, not small farmers
H.R. 1707 — Grown in America Act of 2025 · Filed by David Kustoff (R-TN) · 36 cosponsors · Introduced Feb 27, 2025 · Referred to committee
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What it does
This bill creates a new federal tax credit for businesses that use domestically-produced agricultural commodities as inputs to make food products. The credit is worth up to 25% of domestic agricultural input costs, capped at $100 million per taxpayer per year, but phases in over time—companies must source at least 50% of their agricultural inputs domestically in 2026, rising to 85% by 2034 to claim the full credit. Agricultural cooperatives can pass the credit to their member-patrons.
Why we flagged it
The bill's core mechanism is a refundable business tax credit tied to the use of domestically-sourced agricultural commodities in food production. It is a targeted tax incentive, not a subsidy or direct payment, and operates through the existing general business credit framework.
What the text implies
- The $100 million annual cap per taxpayer creates a hard ceiling that may benefit only the largest food manufacturers and agricultural processors, potentially excluding mid-sized and small businesses from meaningful credit access.
- The escalating domestic-sourcing threshold (50% in 2026 to 85% by 2034) may force businesses to restructure supply chains or absorb higher input costs if domestic alternatives are unavailable or more expensive, potentially raising consumer food prices despite the tax credit.
The full analysis lists 5 implications of this text.
Who stands to gain
large food manufacturers and processors; agricultural cooperatives; agricultural commodity producers (domestic)