H.R. 5809: Fight Hunger Act

This bill, known as the Fight Hunger Act, proposes changes to the Internal Revenue Code of 1986 to provide tax credits for food donations made to specific charitable organizations. Below are the key components and provisions of the bill:

Tax Credit for Food Donations

The bill establishes a new section that allows taxpayers to claim a tax credit based on the value of food donations made to charitable organizations that serve individuals who are ill, needy, or infants. The following points summarize the key details of this provision:

• Eligibility: Taxpayers can elect to apply for this credit for donations made during the taxable year.
• Qualified Donations: The donations must be made to organizations that are recognized as tax-exempt under section 501(c)(3) and must either be in cash or food that is considered wholesome. The receiving organizations are typically food banks, soup kitchens, or similar entities that distribute food to those in need.
• Transportation Costs: Taxpayers can also include transportation costs associated with delivering food donations, capped at the standard mileage rate.

Special Rules and Limitations

The bill includes special rules for the application of the credit:

• Prevention of Double Benefits: A donation counted toward the credit cannot be used to claim any other tax deduction or credit.
• Carryforward of Excess Credits: If a taxpayer's eligible credit exceeds the annual limit, the excess can be carried forward to subsequent years, limited to a five-year period.
• Substantiation Requirements: Taxpayers will need to meet specific documentation requirements to prove their donations qualify for the credit.

Application with Other Tax Credits

The bill outlines how this new credit interacts with existing business tax credits:

• Portions of the credit related to donations from a business will be classified as part of the general business credit, rather than being treated as a standalone credit.
• The remaining credit for individuals after business-related contributions will be treated under personal credit rules.

Effective Date

The provisions of this bill will take effect for taxable years beginning after December 31, 2025. This means that individuals and businesses will not be able to claim the new credit until their tax filings for the year 2026.

Relevant Companies

• UL (Unilever): As a major food and beverage company, Unilever may be impacted by these changes if they decide to increase food donations to take advantage of tax credits.
• PEP (PepsiCo): This company may also be influenced by the legislation as it could incentivize PepsiCo to enhance its philanthropic efforts in food donations, benefiting from the tax credits.