With prices continuing to rise at the store, I’m sure you’re looking for ways to beat inflation on the homestead just like we are. The good news is you can start saving about 6-8% off your homestead-related purchases by filling out a simple application form. Sound too good to be true? I promise it is totally legit!
In our state, it is called the South Carolina Agricultural Tax Exemption or SCATE for short, but many other states offer similar programs. I’ll be talking about the South Carolina program in this post as it is the one we are familiar with. But if you do a Google search for agricultural sales tax exemption and insert your state, you should find the relevant information your specific locale.
How does this save me money on the homestead?
While the focus of the SCATE card leans toward big ag, there are plenty of ways it can benefit small scale. Here are some examples of tax exempt items to help you beat inflation on the homestead:
- Feed used for poultry and livestock
- Fuel used in farm machinery and tractors
- Farm machinery and their replacement parts and attachments
- Electricity used to irrigate crops
- Containers/labels used in preparing agricultural, dairy, grove or garden products for sale
- Building materials, supplies, fixtures and equipment for the construction, repair or improvement of a self-contained enclosure or structure specifically designed, constructed, and used for the commercial housing of poultry or livestock
For a complete list of tax exempt items, check out SCATE website. If you aren’t sure about an item, you can always email [email protected] to ask for clarification.
What about online purchases?
If you’re like us, you buy many homestead items online. Fortunately, if you purchase an item online for delivery in South Carolina, then the online retailer should be able to honor the tax exemption. Even Amazon honors the agricultural sales tax exemption!
Side note on using Amazon: After they accept your SCATE card they will make the default setting “tax-free” and the responsibility is on you to remember to turn on taxes for non-agricultural purchases. To make our lives easier, we created a free business Amazon account to use for any purchases for the homestead that qualify for tax exemption that way we don’t mix up purchases and forget to pay sales tax for non-agricultural items.
Where else can I use my SCATE card?
You can use it at Lowe’s, Home Depot, Tractor Supply, your local feed & seed store and more. We’ve used it all those places to purchase items for our cow fencing, chicken coop builds, parts for the greenhouse, pots for selling transplants, chicken feed, and so on.
How to get agricultural sales tax exemption for my homestead?
You only need an agricultural business, a SCATE application form, and the $24 fee to enjoy three years of tax exemption. Don’t let the idea of “starting a business” intimidate you! Since many homesteads already operate as side hustles (selling eggs, extra veggies, honey, meat shares, etc.), it’s not a huge leap to set up an LLC to make it an official micro business. Currently in South Carolina, it costs a one-time fee of $110 and the time it takes to fill out a 2-page form to become a business. You can even do all of this online these days!
Your homestead does not have to be your primary source of income to qualify for the agricultural sales tax exemption. In fact, there is no minimum level of income required! After the first year of so they will want to see if you’re profitable side of the scale, but your mini-farm business doesn’t ever have to be large to enjoy the tax break perk. For example, we sell plant starts in the spring, extra eggs, whatever veggies and herbs we have a bountiful harvest of, and hope to add some meat to the mix in the next year or two. It’s nice to have a sales tax break for things we’d be doing anyways!
But I don’t live in South Carolina?
Many other states offer sales tax exemption for agricultural-related purchases. If you do a Google search for agricultural sales tax exemption and insert your state, you should find the relevant application forms needed to beat inflation on the homestead.
Will this make my income taxes harder?
Having a mini homestead business will require filling out a few more fields on your annual tax return forms, but it isn’t any more difficult than the rest of the 1040. The extra section is called a Schedule C, and if you have tax software it will walk you through the process with a series of questions. Essentially, they want to know how much you made and how much you spent. Don’t let this once-a-year tax chore scare you off!
These are actually good numbers to be aware of with our homestead anyways! Knowing if you’re bleeding money on goats or need to investigate more affordable feed options is great data to have and will make you a better homesteader in the long-term. Our goal is to have our homestead animals break even and earn a little extra to set us up nicely for the next year. For example, we want our chickens to sell enough eggs to cover the cost of feeding them and a little extra cash to buy some chicks the following year. Or a garden example, we want the plant starts we sell to cover the cost of our seed expenses and give us a fund for more garden seeds and plants.
We personally use a separate account for our business expenses and income. We like Found Bank which is a free online business banking account that is simple and quick to set up. What we like about it is that it provides some basic bookkeeping automatically and at the end of the year provides us with a printable worksheet to be able to fill out the Schedule C form with ease.
What about….?
If I didn’t answer one of your questions, check out the nitty gritty FAQs on the SC Department of Agriculture’s website. Happy homestead building and money saving!