The Path Act: A Tax Deduction To Boost Food Donations

The United States Department Of Agriculture (USDA) estimates that 14% of all American households were food insecure at some time during the year in 2014 [1].  Conversely, a massive 31% of all food in the United States is thrown out to landfills or otherwise wasted, adding up to 133 billion pounds annually [2].

In 2015 both chambers of the US Congress passed the Protecting Americans from Tax Hikes (PATH) Act [3].  By allowing corporations to earn an enhanced tax deduction, so long as food donations are made to a qualified nonprofit organization [4], this change is important as it encourages corporations to donate surplus products, including food, to those in need. 

Small businesses are now able to claim the same tax deductions that C corporations have been allowed since 1976, and non-C corporations can now carry tax deductions forward up to 5 years.  The charitable contributions cap for donations has also been raised from 10% to 15% of a non-C business’s net income, and to 15% of C business’s taxable income.  Additionally, the PATH Act redefines Fair Market Value of donated food items as being the price for which the item would be sold at the time of donation, without having to regard lack of market or internal standards [5]

Powerful economic stimuli like this enable more businesses large and small to participate in the charitable donation of surplus food.  This in turn will provide not just incentive to their own bottom line, but also immediate relief to the many families and communities in need across the United States.

For more on Global Green’s work with food waste reduction and food donations see:

Global Green USA: Food (Waste) Policy and Pilot Programs

Lassoing in Food Waste from the Effie Awards

To help Global Green reduce food waste in NYC and LA email us at [email protected] to learn about upcoming volunteer opportunities.

[1] United States Department of Agriculture, Economic Research Service. “Household Food Security in the United States in 2014.” Accessed April 26, 2016. http://www.ers.usda.gov/publications/err-economic-research-report/err194.aspx

[2] United States Department of Agriculture. “USDA and EPA Join with Private Sector, Charitable Organizations to Set Nation’s First Food Waste Reduction Goals.” Accessed April 26, 2016. http://www.usda.gov/wps/portal/usda/usdahome?contentid=2015/09/0257.xml

[3] National Council Of Nonprofits. “Protecting Americans from Tax Hikes Act of 2015.” Accessed April 26, 2016. https://www.councilofnonprofits.org/trends-policy-issues/protecting-americans-tax-hikes-act-of-2015

[4] The Joint Committee On Taxation. “Technical Explanation Of The Protecting Americans From Tax Hikes Act Of 2015, House Amendment #2 To The Senate Amendment to H.R. 2029 (Rules Committee Print 114-40).” Accessed April 26, 2016. https://www.jct.gov/publications.html?func=startdown&id=4861

[5] Food Donation Connection. “United States Tax Benefits.” Accessed April 26, 2016. http://www.foodtodonate.com/Fdcmain/TaxBenefits.aspx