Colorado Launches First-of-Its-Kind Agricultural Tax Credit Program for Northern Colorado Farmers
The Colorado Department of Agriculture will begin accepting applications November 10 for a groundbreaking tax credit program that could provide Northern Colorado farmers and ranchers up to $300,000 annually for implementing environmental stewardship practices on their land.
The Agricultural Stewardship Tax Credit program, authorized by House Bill 24-1249 and signed by Governor Jared Polis on May 24, 2024, represents the first refundable state income tax credit in the nation specifically designed to compensate agricultural producers for sustainable land management practices that improve soil health, water efficiency, and ecosystem diversity.
"Agriculture is an important part of our economy and way of life. Our farmers and ranchers are true stewards of our lands and this tax credit supports their efforts to improve soil health, protect our water resources and more," said Governor Jared Polis. "I hope that farmers and ranchers around the state will take advantage of this funding opportunity."
The program addresses the substantial agricultural economy in Larimer and Weld counties, where combined farming and ranching operations encompass nearly 3 million acres and generate over $2.2 billion in annual agricultural production value, according to the U.S. Department of Agriculture's Census of Agriculture.
Program Structure Offers Flexible Implementation Options
Agricultural producers can qualify for tax credits by implementing any combination of 17 approved stewardship practices, including no-till or reduced tillage, managed grazing, cover cropping, nutrient management, irrigation improvements, and habitat restoration. The refundable credit structure means producers receive payment even if they owe no state income taxes.
Participants can earn credits for up to three consecutive years, with maximum annual amounts based on the number of practices adopted and total acreage affected. The Colorado Department of Agriculture expects to distribute $3 million annually in tax credits statewide.
"The value of these practices extends beyond improved farm viability for producers, benefiting the entire state through improved soil health, water retention and quality, and biodiversity," said Evanne Caviness, CDA's Conservation Services Division Director.
The program specifically targets practices already common in Northern Colorado agriculture, including irrigation management systems extensively used throughout Weld County's vast network of irrigated cropland, and rotational grazing practices employed across Larimer County's ranch operations.
Applications Open Following Year-Long Stakeholder Process
The November 10 application launch follows extensive collaboration between CDA and agricultural stakeholders to develop qualifying practice standards that reflect regional farming and ranching operations. The broad range of eligible practices accommodates Colorado's diverse agricultural industry while ensuring economic profitability for producers.
Producers applying in November 2025 must implement approved practices throughout 2026 and can apply their earned tax credits toward 2026 state income taxes. The application timeline allows operators to plan practice implementation during optimal seasonal windows for their specific operations.
CDA will conduct two identical informational webinars to explain the program and application process. Sessions are scheduled for October 9 at 10 a.m. and October 16 at 6 p.m., with registration available through Zoom links on the agency's website.
The program includes an online tax credit calculator allowing producers to estimate potential credit amounts based on planned practices and affected acreage.
Northern Colorado Agriculture Well-Positioned for Participation
Weld County, Colorado's top agricultural producer and among the nation's top ten counties for agricultural output, operates over 2.4 million acres of farmland and ranchland with annual production values exceeding $2 billion. The county leads Colorado in cattle production, dairy operations, sugar beets, and forage crops.
Larimer County contributes approximately 600,000 rural acres in agricultural use across more than 1,500 farming and ranching operations, generating $175-$200 million in annual agricultural production value, according to Colorado State University Extension data.
Many Northern Colorado operations already employ practices eligible for tax credits, including conservation tillage systems, manure application programs, irrigation efficiency improvements, and integrated livestock-crop rotations. The Natural Resources Conservation Service reports increasing voluntary adoption of climate-smart practices among irrigated and higher-value operations throughout both counties.
Program Aligns with State Environmental Goals
The Agricultural Stewardship Tax Credit supports CDA's strategic direction of Environmental Stewardship and Climate Resilience outlined in the agency's 2024-2027 strategic plan. The initiative focuses on voluntary adoption of regenerative and climate-smart practices while advancing water resilience across Colorado's agricultural sector.
Colorado's program offers significantly higher annual benefits compared to neighboring states' agricultural incentive programs. Nebraska, Kansas, and Wyoming typically provide $10,000-$75,000 in annual cost-share grants or non-refundable credits, making Colorado's $300,000 maximum annual credit unique among Rocky Mountain and Plains states.
The refundable tax credit structure ensures producers receive full benefit regardless of state tax liability, distinguishing the program from traditional cost-share arrangements that require upfront producer investment.
Interested producers can access program information, practice guidelines, and the tax credit calculator at the Colorado Department of Agriculture website, with applications opening November 10 for the first program year covering 2026 tax credits.