The Dairy Farmer Tax Credit is calculated based on monthly figures such that if the United States Federal Milk Marketing Order price drops below a Trigger Price anytime during the taxable year, a dairy farmer who holds a Certificate of Registration will be allowed a refundable income tax credit based on the amount of milk produced and sold. Below are how the Dairy Farmer Tax Credit and the Trigger Months are calculated.
|Numbers||Tax Credit are Calculated||Example|
|1.||$4,000,000.00 Maximum Available Tax Credit per Year||$4,000,000.00 Total Available|
|2.||Every month that is triggered gets added up. The total months triggered is divided by 12 months for the year to provide a percentage||9 months triggered out of 12 months|
|3.||$4,000,000.00 is then multiplied by this percentage to give that years Tax Credit amount.||$4,000,000 × 75%= $3,000,000 for Tax Credit|
|4.||Massachusetts Farmers report Pounds of Production (subject to verification) to the Massachusetts Department of Agricultural Resources.||$200,000,000 lbs of production reported to DAR from eligible farmers in Massachusetts|
|5.||The Tax Credit Rate is then calculated by dividing the Tax Credit for the year by the Total Pounds of Production.||$3,000,000 Tax Credit ÷ 200,000,000 lbs of production = 0.0015*100 = $1.50 cwt for Tax Credit Rate|
|6.||The Tax Credit Rate is then multiplied by each individual farms production to get their individual credit.||Farmer Reports 1,000,000 lbs production for individual farm|
1,000,000 lbs * $1.50 cwt/100 = $15,000
$15,000 is the individual tax credit for Example Farmer
|Trigger Months Calculations||Numbers||Example||January||February||Comments|
|1.||Total Operating Costs||$14.66||$15.35|
|Numbers 1-3 Come from USDA Cost of Production Numbers||3.||41.8% of Unpaid Labor||$1.30|
|Cost of Production||4.||Trigger Price||$17.81||$18.73||Trigger Price is the addition of number 1-3|
|Farm Price comes from the Milk Market Administrator||5.||Farm Price||$14.14||$21.94|
|6.||Farm Price <Trigger||YES||NO||If the Farm Price is less than the Trigger Price then the month will be counted in the credit calculations for that year.|
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