Tax deductions are available to donors. The following is general information. Be sure to consult with a tax professional for specific information.
In 1976, United States Congress enacted Section 170 of the Internal Revenue Code to encourage donations by allowing organizations to earn a tax deduction for donating surplus property, including food. The Internal Revenue Code grants organizations the ability to claim tax deductions on properly saved and donated food that is equal to half of the food’s appreciated value.
There is a limitation that the total deduction amount cannot exceed twice the donated food’s basic cost. The tax deduction is calculated from the donated food’s fair market value (FMV) and basic food and labor cost. FMV is evaluated by the Internal Revenue Service on a case by case basis.
For more information on tax deductions for professional food establishments, please visit the IRS webpage.
In 2013, Iowa Legislature approved the Farm to Food Donation Tax Credit program that allows farmers who donate food to earn a tax deduction. This program establishes that an amount equaling the lesser of $5,000 or 15% of the value of the donated commodities during the tax year can be claimed. For more information on the program, please visit the Iowa Department of Revenue’s Farm to Food Donation Tax Credit webpage.