R&D Tax Credits for Farmers: The Profit Tool You’re Missing

Feb 23

Most farmers assume tax credits are reserved for Silicon Valley startups and lab-coated scientists.

They’re wrong.

The Research & Development (R&D) Tax Credit has been part of the U.S. tax code since 1981. Originally designed to encourage innovation, it has evolved into a more accessible, taxpayer-friendly incentive — yet it remains dramatically underutilized in agriculture.

In this episode of the Farm4Profit Podcast, we sit down with the team at Onshore, a tax technology company founded in 2020 that is helping producers and agribusinesses unlock legitimate tax incentives through automation and audit-ready documentation.

Joining us:

Tim Taschner – A Midwest native who grew up around ADM and now leads agricultural R&D tax credit case studies.
Dominic Vitucci – CEO with a background in accounting and computer science, combining tax expertise with automation and AI-driven systems.

This isn’t a “loophole” conversation. It’s a strategy conversation.

What Is the R&D Tax Credit — Really?

At its core, the R&D tax credit rewards businesses for investing in experimentation and process improvement. It applies when operations attempt to develop or improve products, processes, formulas, or techniques through testing and evaluation.

In agriculture, that can include:

Testing new seed hybrids
Trialing chemistries or fertility programs
Refining feed strategies
Improving livestock genetics
Adjusting irrigation or production processes
Innovating in food processing methods

If you’re experimenting to improve yield, efficiency, quality, or cost structure — you may already be performing qualifying activities.

The Evolution of the Credit

Since its creation in 1981, the credit has expanded to become:

More permanent (no longer constantly expiring)
More accessible to mid-sized businesses
Available to offset payroll taxes in certain cases
Eligible for carrybacks and carryforwards

Yet agriculture has been slow to adopt it.

Why? Complexity and documentation requirements.

Historically, assembling audit-ready support meant weeks of manual record gathering, interviews, and spreadsheets. That barrier alone prevented many operators from pursuing credits they legitimately earned.

How AI Is Changing the Game

Onshore’s platform integrates with enterprise systems and uses automation to complete roughly 80% of the documentation process.

Instead of building reports manually, their software:

Processes operational data quickly
Organizes qualifying activities
Generates audit-ready documentation
Provides free audit defense support

“Audit-ready” means the documentation is structured clearly enough to withstand IRS review — not just estimated or loosely justified.

In today’s enforcement environment, that matters.

Deductions vs. Credits: Why It’s a Big Deal

One of the most important clarifications in this episode is the difference between deductions and credits.

Deductions reduce taxable income.
Credits reduce taxes owed dollar-for-dollar.

If you owe $100,000 in taxes and qualify for a $20,000 credit, your tax bill drops to $80,000.

That distinction alone changes how producers should evaluate innovation spending.

What If You Haven’t Paid Taxes Yet?

Another key discussion point:

Credits can sometimes offset payroll taxes.
They may carry back to prior tax years.
They can carry forward into future years.

In a tight-margin environment, timing flexibility matters.

Beyond R&D: Cost Segregation and 179D

The conversation also explores other often-overlooked incentives:

Cost segregation strategies
Section 179D energy-efficient building deductions

These tools, when combined strategically, can significantly impact after-tax profitability.

Who Should Pay Attention?

If you operate:

800+ acres
Livestock operations
Food processing facilities
Agribusiness support companies
Or any operation actively testing improvements

This episode could directly impact your bottom line.

Because the smartest operators don’t just grow crops.

They optimize capital.

Why This Matters Right Now

Margins are tight.

Input costs remain volatile.

Markets move fast.

Producers who ignore legitimate credits are effectively leaving money in Washington that could be reinvested into land, equipment, genetics, or technology.

Onshore’s mission is simple:

Turn tax incentives from a confusing compliance burden into a strategic advantage.

And in agriculture today, strategic advantage is everything.