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Department of Taxation and Finance

Investment tax credit: eligible farmers income test

To be eligible for the higher 20% investment tax credit rate, the qualifying property must have: (1) been placed in service on or after April 1, 2022, (2) been principally used in the production of goods by farming, and (3) been placed in service by an eligible farmer. (Test is performed at the entity level.)

To determine if you meet the two-thirds of excess federal gross income test to be an eligible farmer, you must complete the below worksheet for your entity type. If your decimal on the final line of your worksheet is less than 0.6667, then your farm income is not two-thirds of your excess federal gross income. You may also use the three-year averaging method to determine eligibility. However, if that resulting decimal also is less than 0.6667, you are not an eligible farmer and cannot claim the higher rate of 20% for your investment tax credit.

  • Worksheet A to determine if a Forms CT-3 and CT-3-A filer is an eligible farmer
  • Worksheet B to determine if a Form CT-3-S filer is an eligible farmer
  • Worksheet C to determine if a sole proprietor is an eligible farmer
  • Worksheet D to determine if a Form IT-205 filer (fiduciary) is an eligible farmer
  • Worksheet E to determine if a Form IT-204 filer (partnership) is an eligible farmer

Definitions

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 are engaged in the business of farming if you are a partner in a partnership, a shareholder in a New York S corporation, or the beneficiary of an estate or trust that operates or manages a farm for gain or profit.

You are also engaged in the business of farming if you rent your farm property to another person who uses the property in agricultural production, and the rental arrangement meets one of the following conditions:

  • the amount of the rental is a crop share (shared rental agreement), meaning the amount of rent is based upon the actual production of the land, whether paid to you in cash or in kind; or
  • you have an arrangement with your tenant for your participation in the farm business and meet one of the following four tests:
    • you do any three of the following:
      • pay or stand good for at least half of the direct costs of producing the crop,
      • furnish at least half of the tools, equipment, and livestock used in producing the crop,
      • consult with your tenant, or
      • inspect the production activities periodically;
    • you regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise;
    • you work 100 hours or more spread over a period of five weeks or more in activities connected with crop production; or 
    • you do things which, considered in their total effect, show that you are materially and significantly involved in the production of farm commodities.

Farming includes the operation or management of livestock, dairy, poultry, fish, fruit, fur-bearing animal, and vegetable (commonly referred to as truck) farms. Farming also includes the operation or management of plantations, ranches, ranges, and orchards.

For example, farming includes, but is not limited to, the raising or production of the following commodities:

  • field crops, including corn, wheat, oats, rye, barley, hay, potatoes, and dry beans;
  • fruits, including apples, peaches, grapes, cherries, and berries;
  • vegetables, whether raised conventionally or hydroponically, including tomatoes, snap beans, cabbage, carrots, beets, and onions;
  • horticultural specialties, including nursery stock, ornamental shrubs and ornamental trees, and flowers;
  • livestock and livestock products, including cattle, sheep, hogs, goats, horses, poultry, farmed deer, farmed buffalo, ostrich, emus, fur-bearing animals, milk, and eggs;
  • aquaculture products, including fish, fish products, water plants, and shellfish (provided the aquaculture products are grown and raised as opposed to merely being harvested or caught);
  • honey and beeswax produced from your own bees; and
  • maple syrup or cider, regardless of whether the income from these operations is includable on federal Schedule C, Profit or Loss from Business, or Schedule F, Profit or Loss From Farming.

Farming also includes:

  • the sale of wine from a licensed farm winery, as provided in Alcoholic Beverage Control Law Article 6; 
  • the commercial boarding, of horses as defined in Agriculture and Markets Law section 301(13); 
  • a managed Christmas tree operation whether dug for transplanting or cut from the stump; and 
  • the sale of cider from a licensed farm cidery, as provided in Alcoholic Beverage Control Law § 58-c.

You are not engaged in the business of farming if:

  • your principal source of income is from providing agricultural services, such as soil preparation, veterinary services, or farm labor;
  • you manage or operate a farm for a salary or fee;
  • you are cultivating or operating a farm for recreation or leisure (such as a hobby farm); and
  • you do forestry and logging unless the products are used in the operation of a farm or are connected with an otherwise qualifying farm operation as described above (that is, the income from these operations is properly reportable on federal Schedule F).

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