Arkansas Grown

Something in the Water Groundwater Conservation Leads to Tax Breaks Conserving groundwater, one of the state’s most In the past five years, an estimated 15,200 acreprecious natural resources, has been a goal of feet of groundwater has been conserved due to the Arkansas’s agriculture industry and state government construction of 57 surface water conversion projects leaders for decades. The Arkansas Department of that were approved for a state tax credit. As of fall Agriculture is working to get the word out to more 2019, more than 25,000 farm acres were covered Arkansas producers about a state tax credit program under the tax credit program. that helps offset the cost of Kathryn Stewart with the implementing groundwater “Arkansas farmers Arkansas Department of conservation practices. understand better than Agriculture’s Natural Resources The Water Conservation Tax Division sees opportunity for almost anyone the Credit Program was established more producers to participate importance and value by the Arkansas Legislature in the tax credit program, of water, and some have in 1985 to assist producers and she is working to make learned it the hard way in their efforts to conserve more producers in the critical groundwater. All Arkansas groundwater areas aware of the when they turned on farmers are eligible for tax program and its benefits. their well and nothing credits for specific conservation “The main goal is to keep came out.” measures including surface pushing this program and get impoundments and land leveling. as many people to apply for a tax credit as we can,” In 1991, the Legislature enacted a law to identify Stewart said. “The tax credit is a great tool to help critical ground water areas in the state. Critical producers afford the cost of water conservation ground water areas are defined as regions with practices and protect our groundwater resources for significant declines in groundwater or degradation the next generation.” of water quality. Critical areas include parts of 18 Farmers may claim a 50% tax credit, up to $9,000 counties in eastern and southern Arkansas, including each taxable year, for costs incurred in construction, all of Lonoke, Prairie, Jefferson, Arkansas, Ouachita, installation or restoration of a reservoir, or holding Calhoun, Bradley, Columbia, Phillips, and Union pond, of at least 20 acre-feet. This tax credit allows Counties. Monroe County in eastern Arkansas was farmers to claim up to $90,000 over a 16-year period. added to the list in 2019. Farmers in the critical areas are eligible for a higher percentage of tax credit Farmers may receive a 10% credit for land-leveling, up assistance from the state for certain improvements, to $9,000 each year, with a total credit of $27,000. and they may be eligible for additional benefits under In critical areas, farmers who convert from some federal conservation programs, including the groundwater to surface water are eligible for a credit Environmental Quality Incentives Program (EQIP) of up to 50% of the total project costs. Outside critical administered by the United States Department of Agriculture’s Natural Resources Conservation Service. areas, that credit is 10%. Similarly, a 50% credit is available for the cost of water meters installed on Arkansas ranks fourth in the nation for total water use wells in critical areas, and a 10% credit in and second in the U.S. for groundwater withdrawals. noncritical areas.

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