Ralph Pastore, CFO, Verdelis Investments, and Principal, Sciara Pastore & Megale LLC, offers more valuable insight into a newly signed tax provision that can directly benefit ag startups. Ralph is a noted expert in accounting and tax accounting and has published numerous articles on U.S. taxation for foreign entities.
As explored in some detail in a prior post, on July 4, 2025, President Donald J. Trump signed the “One Big Beautiful Bill,” a new pro-growth tax law intended to boost American manufacturing, processing, and production. This legislation includes a significant new incentive: full, first-year bonus depreciation for the construction of permanent structures used in qualified production activities within the United States.
This represents a major change from the previous law, which required the cost of building production facilities to be depreciated gradually over a 39-year schedule. Under the new law, qualifying facilities can be fully expensed in the year they are put into service, provided they are operational within specific statutory timelines. For companies considering large-scale capital projects, this change can significantly improve investment returns and make domestic facility development more appealing.
Targeted Relief for the Agricultural Sector
The new law includes specific provisions for the agricultural sector, especially for controlled-environment agriculture (CEA) and other ag-tech infrastructure. The following assets and facilities are explicitly eligible for the new bonus depreciation:
- Controlled environment production facilities: This includes vertical farms, greenhouses, and grow rooms.
- Post-harvest processing improvements: These are improvements linked to production, such as cold storage, washing, grading, and trimming facilities.
- Oilseed and biomass conversion infrastructure: This covers the pressing of hemp, soybeans, and sunflowers, as well as fermentation for fuel-grade products like ethanol, kombucha, and silage.
- Embedded infrastructure: This category includes on-farm irrigation, animal handling, and vineyard or orchard structures. It also covers sensor networks, AI-enabled robotics, and renewable energy systems that are deployed directly within the production facilities.
These tax code enhancements are among the most significant in decades for agri-businesses, agri-processing startups, and developers of climate-aligned agricultural infrastructure.
A Creative Path for Startups
While the bill is very favorable for profitable companies with taxable income to offset, it presents a challenge for startups and early-stage firms that often operate at a loss. In the past, these companies would often use structures like the sale-leaseback model, where an investor would buy the facility and lease it back to the company, claiming the depreciation.
However, the “One Big Beautiful Bill” restricts this approach. To claim the full bonus depreciation, the same entity must both own and actively use the facility for a qualified production activity. In other words, companies can no longer “lease their way” into claiming this depreciation.
Despite this, there are compliant and creative structures available to help startups monetize these incentives. For example, a carefully designed partnership may allow capital investors to claim depreciation while the startup maintains operational control and use of the facility. These structures require careful tax engineering, but they can bridge the gap between innovation and investment.
Final Thoughts
In tax law, as in life, “you can’t have your cake and eat it too” — but with careful structuring and regulatory alignment, you might just build the bakery. The “One Big Beautiful Bill” creates new opportunities for agricultural innovators, infrastructure developers, and capital partners to speed up production in the United States. Whether you are a profitable operator looking to increase your return on investment or a startup in need of structured capital, the business landscape has changed, and it may be the right time to take action. For advisory and partnership inquiries, you can contact our Equity Group Lead, Ralph Pastore, at rpastore@proaginv.com.