Some Farms Are Sitting on R&D Tax Credits and Don’t Know It

Most agribusiness owners don’t see themselves as running research and development operations. They think in terms of solving problems, improving outcomes, and making decisions that move the farm forward. That might look like testing new feed blends, trying different seed varieties, adjusting equipment setups, or refining how livestock are managed across changing conditions.

That mindset is exactly why so many farms are leaving significant R&D tax credits on the table. What feels like day-to-day operational improvement can meet the definition of qualified research. And now, with recent legal developments, there is even more clarity and support behind that position.

New Court Ruling Supports R&D Tax Credits for Farms

In February 2026, the George v. Commissioner case provided something the agriculture industry has not seen enough of in the R&D tax credit space: favorable, practical validation.

At a high-level, a poultry producer claimed research and development tax credits for experimental feed and vaccine trials. In response, the court recognized that certain agricultural activities can meet the criteria for qualified research. It also supported the use of a pilot-style approach in farming, where livestock and the inputs used during testing, such as feed, may be treated as eligible supply costs.

The decision was favorable for the agriculture industry, but it also reinforced a critical point: identifying qualifying activities is only the first step. Strong documentation and a well-supported methodology remain essential to maximizing and defending a credit claim.

This case reinforced several important points:

• Innovation tied to livestock operations can qualify as research and development.
• Real-world experimentation, even outside of traditional lab environments, still counts.
• Businesses demonstrating good faith in how they calculate and claim credits can avoid penalties, even if some items are challenged.
• Passing the audit is not a given, and keeping accurate records from the beginning is a must.

The George v. Commissioner ruling matters because it confirms what research and development can look like in the agriculture industry. Innovation happens in the field, in barns, and through ongoing trial and adjustment… not only in lab environments.

What “R&D” Actually Looks Like on a Farm

One of the biggest barriers to claiming R&D credits in agriculture is simply not recognizing what qualifies. When most people hear “research and development,” they picture labs, engineers, or technology companies. In reality, many of the activities happening on farms every day also fit within the criteria. If you step back and look at a farming operation, qualifying activities often fall into a few key areas:

Livestock Innovation

• Testing different feed compositions to improve growth or health
• Experimenting with immunizations or treatment protocols
• Adjusting environmental factors like temperature, lighting, or housing conditions

Crop and Field Optimization

• Comparing seed varieties across different conditions
• Soil mapping and yield analysis to improve output
• Testing irrigation or nutrient strategies

Equipment and Process Improvements

• Modifying or reconfiguring machinery for better performance
• Trial and error with feeders, milking systems, or handling processes
• Iterating on workflows to improve efficiency or reduce loss

Technology and Data-Driven Farming

• Implementing precision agriculture tools and mapping systems
• Leveraging AI-driven equipment or analytics platforms
• Investing in cloud-based tools or custom software development
• Engaging third-party developers to build or refine systems

These activities may not feel like formal research and development when you are in the middle of them. Instead, they feel like normal, everyday considerations that keep your farm running smoothly, which is exactly why they get overlooked.

How Much Is Being Left on the Table

When agribusiness owners start to walk through their activities in detail, the opportunity often becomes clear very quickly. One family-run farm we worked with initially didn't expect much from the process. Over three years, they had more than $1 million in qualified research spend and walked away with a credit in the hundreds of thousands of dollars.

That kind of result is more common than most people expect, once the right questions are asked and the right data is reviewed. The real barrier is awareness. Many farms simply assume their activities don't qualify, or that the benefit won't be worth the effort.. There is also a common assumption that if the R&D tax credit applied to them, their advisor would have already brought it up, which is not always the case.

Addressing the Fear Around Audit Risk

For many business owners, the hesitation is about what happens after they claim the credit. Will this increase the likelihood of an audit, or will the IRS challenge everything more closely? Is this approach too aggressive? These are fair questions, and they deserve a clear answer.

The recent case law we referenced above provides helpful context. In the George v. Commissioner case, the court acknowledged that while not every position taken by the taxpayer was perfect, the use of a qualified firm and a structured process demonstrated good faith. That distinction contributed to the taxpayer avoiding penalties.

How the credits are approached in practice matters:

• Taking the credit as part of an annual process is generally more defensible than amending multiple prior years
• Structured documentation and clear methodologies reduce uncertainty
• Working with a team that understands both the technical rules and the industry context strengthens your position
  

What the Process Looks Like

For those who have never explored R&D credits, the assumption is often that the process will be complex, disruptive, or time-consuming. The reality is that it is generally more structured and manageable than most expect.

Our typical approach includes:

• An initial education session to walk through examples and identify potential qualifying activities
• A focused data request, usually centered around payroll, roles, and operational areas
• A high-level estimate of the potential credit and associated fees
• A clear decision point before moving forward with a full study

From there, the process becomes repeatable. Treating R&D as an annual activity, rather than a one-time catch-up effort, tends to create stronger outcomes and reduce risk over time.

Who This Is a Good Fit For

Not every operation will benefit in the same way, but there are clear indicators of where this tends to be most valuable. It comes down to the level of activity and the presence of ongoing improvement.

Strong fit:

• Profitable agribusinesses with consistent tax liability
• Operations that include actively testing, improving, or refining processes
• Farms investing in equipment, technology, or outside expertise

Less ideal:

• Very small operations with limited or no taxable income
• Businesses with minimal experimentation or process change

Why This Matters Right Now

Agriculture is evolving quickly. Technology adoption is accelerating, cost pressures are increasing, and the tax landscape is shifting as new guidance continues to emerge.. For agribusiness owners paying attention, that combination creates a real opening. The opportunity is already built into how you run your farm. The question is whether you are capturing it.

At Redpath, we work with agribusiness owners to identify what qualifies, quantify the opportunity, and support the process from start to finish. That includes standing behind the work if questions ever come up.