California Extended Tax Credit for Food Donations
Agricultural producers can now claim a 15% state tax credit for donating surplus food through 2032.
Updated on Sept. 30, 2026 in Philanthropy
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Governor Gavin Newsom signed Senate Bill 881, which extends a state tax credit for surplus food donations by farmers and producers through 2032. The legislation prevents the expiration of this incentive, which is designed to reduce agricultural waste while addressing food insecurity.
Why it matters
By extending this credit, the state aims to mitigate waste and support regional food banks amid increasing pressure on family food security. Maintaining this incentive allows agricultural operators to recoup some costs of donating surplus goods rather than disposing of them.
The program provides a 15% state tax credit for surplus food donations, a move that helped generate $10.7 million in donated goods during 2024. The extension ensures the credit remains available through 2032 for producers of items ranging from produce and dairy to canned and frozen goods.
The players
Gavin Newsom
The Governor of California who signed Senate Bill 881 into law to extend state tax credits for food donations.
The details
The tax credit applies to a broad category of food items, including fruits, vegetables, nuts, meat, poultry, dairy, and shelf-stable goods. Farmers, growers, and food producers can utilize the 15% credit to offset the costs associated with donating surplus agricultural products to food banks. Additionally, the new law extends the mechanism for taxpayers to contribute to food banks directly through their annual state income tax returns through 2033.
Timeline
The tax credit program was originally established in 2011.
The state legislature approved Senate Bill 881 in August 2026.
Governor Gavin Newsom signed the legislation on September 29, 2026.
The previous tax credit program was scheduled to expire on January 1, 2027.
Market Landscape
This legislation follows the precedent of the original Donated Fresh Fruit or Vegetables Tax Credit created in 2011. The extension aims to maintain the current operational flow of surplus goods to food banks as federal nutrition program changes pressure household food budgets.
Agricultural operators should review their surplus inventory and current tax planning to ensure they are capturing the 15% credit for qualifying food donations. Consult with a tax professional to confirm the eligibility of specific food categories under the extended program guidelines.
The takeaway
The extension of this tax credit provides a multi-year window for agricultural businesses to formalize their surplus donation strategies. Operators should prioritize tracking donation volumes throughout the fiscal year to maximize the 15% state tax credit eligibility at tax time.
Further reading
For more on how state incentives shape charitable efforts, see Philanthropy.
Source note: This article includes information reported by The Vacaville Reporter.
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