Tax Credit for Grocery Stores in Food Deserts

The U.S. Department of Agriculture (USDA) defines food deserts as areas where access to affordable and nutritious food is limited. Median household income and distance from grocery stores, along with other considerations, including access to personal/public transportation, typically determine whether an area is designated as a food desert. Living in food deserts impacts a multitude of factors including: food security, food affordability, federal nutrition program participation, health outcomes, economic and social attainments, real estate prices, and more. Several bills this year intend to provide tax credits to increase availability of nutritious and healthy foods within the food desert areas of Missouri. HB1570, HB2020, SB717, and HB1919 authorize tax credits for urban farms located in food deserts. SB790 authorizes a tax credit for full-service grocery stores and is unique from the other four bills, because it is not restricted to urban areas and authorizes tax credits on expenses incurred from the construction or establishment of a full-service grocery store in a food desert in the state of Missouri.

Highlights 

• Living in a food desert contributes to the lack of access to healthy and affordable foods and can negatively affect health.
• Prices at convenience stores in food deserts tend to be higher than in grocery stores (ranging from 5% to 25% higher for basic purchased foods, such as milk and cereal).
  • Many low-income consumers would like to shop outside food deserts and lower prices, but may not be able to get to stores that offer these low prices.
• Financing the construction of new supermarkets and the expansion of existing stores is one of the primary strategies to increase access to sources of healthy food in underserved communities.
  • Although full-service grocery stores in low-income neighbourhoods have little impact on reducing obesity, they can have an impact on community health and well-being, including economic benefits.

Limitations 

• Defining what lack of access to affordable and nutritious food means and estimating exactly how many people are affected by living in food deserts is not straightforward.
  • While all people living in-neighborhoods are affected by their neighborhoods’ characteristics, not all of those living in low-income neighborhoods are poor or food insecure, and vice versa.

This Note has been updated. See the previous version (published March 2021) here.