This bill excludes micro-grants received for food security projects from gross income for tax purposes.
Lisa Murkowski
Senator
AK
This bill amends the Internal Revenue Code to exclude micro-grants received for food security projects from gross income. Specifically, it ensures that financial assistance provided under the existing micro-grants for food security program is not treated as taxable income for eligible entities. This change supports organizations working to increase access to healthy food in underserved communities.
Food Security Micro-Grants Get Tax-Free Status: New Provision Protects Local Farming Funds from the IRS
This bill makes a surgical change to the Internal Revenue Code that could have a big impact on how local food projects spend their money. Specifically, it adds Section 139M to the tax code, which officially excludes 'micro-grants for food security' from being counted as gross income. If you’re running a small agricultural co-op or a community-based producer network, this means the grant money you receive through the 2018 Farm Bill’s food security program stays in your pocket to buy seeds, tools, or refrigeration rather than being shaved off by the IRS. The goal is to ensure that federal funds intended to fix food deserts actually go toward food, not back into the government's tax coffers.
Keeping the 'Micro' in Micro-Grants
When a local non-profit or a small-scale farmer's network wins a competitive grant to increase healthy food access in an underserved neighborhood, the last thing they need is a tax bill on that lifeline. Under current rules, unless a specific exemption exists, the IRS often views grant money as taxable income. This bill changes the math. For example, if a community group in a rural area receives a grant to build a solar-powered greenhouse, they would typically have to set aside a portion of that cash for taxes. By classifying these as 'excluded from gross income,' the bill ensures that 100% of the awarded funds can be spent on the project itself, effectively stretching every dollar further for the people who need fresh produce.
Who Gets the Break?
The tax break isn't for everyone—it’s specifically targeted at 'eligible entities' defined under the 2018 Farm Bill. This includes agricultural cooperatives, producer networks, and community-based organizations that are working on the ground to solve food insecurity. Because the bill has a low level of vagueness, the boundaries are clear: if you aren't part of this specific federal micro-grant program, your tax status doesn't change. However, for those in the program, the benefit is immediate for any taxable year starting after the bill is enacted. It’s a straightforward administrative fix that removes a financial hurdle for the very people trying to make groceries more accessible and affordable in high-need areas.