Alcoholic beverages tax: farming

New York State agriculture is an integral part of our state’s craft beverage industry. Alcoholic beverages tax is not imposed on agricultural products used in the production of alcoholic beverages. This section contains information on a variety of other tax exemptions, and tax credits, available for those involved in this aspect of alcoholic beverage production.

Farming includes the growing and harvesting of crops used in producing alcoholic beverages for sale, such as grapes, apples, hops, and grains. Some farmers sell their products to alcoholic beverage producers, while others use their crops to produce their own alcoholic beverages for sale. In both circumstances, a variety of sales tax exemptions exist. For more information, see Tax Bulletin Exemptions for Farmers and Commercial Horse Boarding Operators (TB-ST-244).

Information

Equipment purchases

The machinery and equipment you use predominantly (more than 50% of the time) in farm production are eligible for a sales tax exemption. To claim the exemption, you must give Form ST-125, Farmer’s and Commercial Horse Boarding Operator’s Exemption Certificate, to the seller at the time of purchase.

Examples of eligible items are:

apiary equipment
balers
combines
computers used to perform agricultural research
crop data management systems
crop sprayers
cuttings (slips) or rootings
harvesters
irrigation management software
parts and tools for farm equipment
pelletizers
pesticide application tracking software
seeds
sprouters
trellis systems

Utilities

The utilities you use or consume in farm production are also exempt from sales and use taxes. These include:

non-highway diesel motor fuel (but not motor fuel or highway diesel motor fuel)
gas (natural gas, propane, etc.)
electricity
refrigeration
steam and
gas, electric, refrigeration and steam services.

Purchases of non-highway diesel motor fuel that you will use in farm production are eligible for exemption from sales and use taxes only if you give the seller Form FT-1004, Certificate of Purchases of Non-Highway Diesel Motor Fuel or Residual Petroleum Product for Farmers and Commercial Horse Boarding Operations.

For all other purchases, you must give the seller Form ST-125, Farmer’s and Commercial Horse Boarding Operator’s Exemption Certificate, at the time of purchase.

Motor fuel and diesel motor fuel

Motor fuel (gasoline) and highway diesel motor fuel

You must pay sales tax when purchasing motor fuel (gasoline) and highway diesel motor fuel. However, if you are a farmer, you can use Form FT-500, Application for Refund of Sales Tax Paid on Petroleum Products, to claim a refund of sales tax paid on these products that you used in farm production. For more information, see Form FT-500 instructions.

Motor fuel (only)

If you have a farming operation, you can use Form FT-420, Refund Application for Farmers Purchasing Motor Fuel, to claim a refund of the motor fuel excise tax, the petroleum business tax, and the sales tax on motor fuel (but not diesel motor fuel) that you used directly and exclusively in farm production. To see if your purchases qualify, see Form FT-420 instructions for definitions of directly and exclusively.

Farm workforce retention credit

If your operation has farm employees, you may be eligible for the farm workforce credit. For more information, see Farm workforce retention credit.

Updated: April 11, 2024