New York’s Tax Credit for Farmers Explained

By Blake Jackson

New York is working to improve the management of a tax credit designed to help farmers offset overtime labor costs. Farmers currently apply for the credit during tax season, months after incurring the expenses. This delay creates cash flow challenges, according to Assemblyman Chris Tague, a Republican from Schoharie.

“All I hear from our farmers is that it’s very confusing. It’s not exactly what they thought it was going to be,” said Tague, the ranking Republican on the Agriculture Committee. Agriculture Commissioner Richard Ball noted that an early reimbursement option is available online, which allows farmers to access funds before tax season. In September, 63 farms used the tool, receiving a total of $1 million. Despite this, most farmers are waiting until the end of the year to claim the tax credit. Ball emphasized that it is still too early to determine the most effective way to distribute these credits.

The tax credit was introduced in 2022 alongside a new law making farm workers eligible for overtime. Democratic Governor Kathy Hochul approved the initiative to help farmers manage these increased costs. However, efforts to simplify the process have faced setbacks.

Last year, Governor Hochul vetoed a proposal to streamline access to the tax credit, citing the need to address the issue through the state budget. However, the budget proposal for this year did not include these changes. Commissioner Ball stated that discussions are ongoing, and the Agriculture and Markets and Taxation and Finance departments are working to draft updated language for lawmakers.

The tax credit’s design must account for complex business structures in agriculture, such as farms that use management companies. Rules must ensure that the entity paying workers receives the credit.

In her budget request, Hochul proposed $364 million for the Department of Agriculture and Markets. This includes $10 million for improvements to milk storage and dairy supply chains, $5 million more for the Nourish New York food assistance program, and $51 million for upgrades to the state fairgrounds.

As these efforts unfold, stakeholders aim to create a more efficient and accessible tax credit system for New York farmers.

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