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Tax Basics: Farmers
Are you a farmer?
Are you in the farming and agriculture industry? As a farmer, you may qualify for certain tax incentives!
These valuable tax credits and other money-saving incentives are for farming operations of all sizes. They provide farmers with additional resources to reinvest in their businesses for improvements and expansion, which strengthens the industry and promotes job security and growth.
General definition of a farmer
You are engaged in the business of farming if you cultivate, operate, or manage a farm for gain or profit, even though the operation may not produce a profit every year. You may also be a farmer if you are also engaged in the business of farming if you rent your farm property to another person.
Farm and agricultural credits
Farmers school tax credit
You may be eligible for this credit if you or your business:
- is engaged in the business of farming; and
- pays school district property taxes on qualified agricultural property.
For more information see Farmers’ school tax credit.
Farm workforce retention credit
You may be eligible for this credit if you or your business:
- is an eligible farmer; and
- employs eligible farm employees who work at least 500 hours.
The credit is equal to $1,200 per eligible farm employee. For more information see Farm workforce retention credit.
Farm donations to food pantries credit
You may be able to claim this credit if:
- you are an eligible farmer; and
- you or your business made a qualified donation or are the owner of a business entity that made a qualified donation to an eligible food pantry in New York State.
The credit is equal to 25% of the fair market value of qualified donations, with a maximum benefit of $5,000 per year. For more information see Farm donations to food pantries credit.
Investment Tax Credit
You may be eligible for this credit if you or your business:
- are an eligible farmer; and
- places in service qualified property principally used in the production of farming, agriculture, horticulture, floriculture, or viticulture after April 1, 2022.
The credit is 20% of your qualified investment in property and may be refundable. For more information see Investment tax credit.
Farm Employer Overtime Credit
You may be eligible for this credit if you or your business:
- is an eligible farmer; and
- employs eligible farm employees that you paid eligible overtime.
The credit is 118% of additional overtime paid above the overtime work threshold but not hours in excess of 60 hours. For more information see Farm employer overtime credit.
Credit for rehabilitation expenses for historic barns
You may be eligible to claim a credit for qualified expenditures incurred in the rehabilitation of a historic barn located in New York State. You must own the barn to be eligible for the credit.
The New York Office of Parks, Recreation and Historic Preservation is responsible for determining if the barn and related expenditures qualify for the credit. For more information see Credit for rehabilitation expenses for historic barns.
Alcoholic beverage production credit
You may be eligible for this credit if you or your business:
- is a registered distributor of alcoholic beverages; and
- produces 60 million gallons or less of beer or cider, 20 million gallons or less of wine, or 800,000 gallons or less of liquor in New York State during the tax year.
For more information see Alcoholic beverage production credit.
Conservation easement credit
You may be eligible to claim this credit if you or your business own land that is subject to a conservation easement that is held by a public or private conservation agency. For more information see Conservation easement credit.
Tax exemptions
Most property tax exemptions are offered by a local option of the taxing jurisdiction (municipality, county, or school district). Check with your assessor to determine what exemptions are available in your community. The following exemptions are available for farmers:
Agricultural assessment
Agricultural land owners may be eligible for an agricultural assessment to provide property tax relief to them. For more information, see Form RP-305, Agricultural Assessment Application.
Farm building exemption
New farm buildings—New York’s Real Property Tax Law provides a 10-year property tax exemption for new or reconstructed agricultural structures. The application must be made within one year after the completion of construction work. For more information see Farm building exemption.
Historic barns exemption
A limited tax exemption is available for increases in the assessed valuation on historic barns. Eligibility is determined by the local assessor or board of assessors with whom the application is filed.
For more information, see Publication 1094, Farm Building Exemptions, Questions & Answers.
Sales tax exemptions for farmers and commercial horse boarding operators
Farmers and commercial horse boarding operators can buy certain items and services without paying state and local sales or use taxes. To make qualifying purchases without paying sales tax, complete Form ST-125, Farmer’s and Commercial Horse Boarding Operator’s Exemption Certificate.
For more information, see Tax Bulletin, TB-ST-244, Exemptions for Farmers and Commercial Horse Boarding Operators.
Tax modifications
You may be eligible to subtract 15% of net farm income included in federal adjusted gross income if you are a farmer or farm business with less than $250,000 in net farm income.
For more information see the instructions for Form IT-225, New York State Modifications.
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