New York Farm Employer Overtime Credit - What you need to know

With 2024 around the corner, New York state farmers need to begin thinking about the Farm Overtime Credit that will provide a refund for hours worked between the thresholds set by the state and 60 hours. The table below outlines eligible hours, which for 2024 will be four hours:

Effective Date	Eligible Overtime Hours
January 1, 2024	56-60
January 1, 2026	52-60
January 1, 2028	48-60
January 1, 2030	44-60
January 1, 2032	40-60

Here is what farmers need to know:

Only eligible farmers, generally those individuals or entities with two-thirds gross income from farming, are eligible for the credit.
The credit equals 118% of the additional cost of the eligible overtime paid to eligible farm employees.
In 2024, hours between 56 and 60 will count towards the refundable credit.
Only fiscal year filers are eligible for the credit in 2023, provided they paid eligible overtime after January 1, 2024.
General executive officers are not eligible for the credit.
Licensed farm wineries and cideries whose sale of wine/cider accounts for more than 50% of farm income may only claim the credit for employees employed directly on agricultural property (i.e., production employees, not retail staff).
Eligible farmers can request an advance payment for the portion of the credit on the overtime paid from January 1— July 31 by submitting an application to New York State Department of Agriculture and Markets by September 30, 2024. More information can be found via New York State Agriculture and Markets website.
Once this takes place, the farmer will receive a certificate of the advanced payment that they can use to request their share of the advance payment from New York State Department of Tax and Finance by November 1.

Example
In 2024, an eligible farm employee (i.e., non-general officer) worked 59 hours during the week for an eligible farmer at $15/hour regular rate and $22.50/hour overtime rate. The calculation for that week would be 118% x 3 hours (56 to 59) x $7.50, which is the additional cost of the overtime wage. $26.55 would be the overtime credit earned during this period. Assuming this was the only employee on the farm and worked 50 weeks during the year with 3 hours of overtime each week, the annual overtime credit would be $1,327.50. In this instance, the farmer chose to forgo the advanced payment and instead chose to receive the credit when he files his 2024 income tax return. To the extent he has other credits that offset New York state income tax, such as the investment tax credit, he will receive the $1,327.50 overtime credit as a full refund. It is important to keep in mind that in 2024, this will be considered federal taxable income to the farmer.

Keep in mind that not all farmers will qualify due to their gross income thresholds and the way their entities are structured. In any tax credit situation, it is important to work with your Farm Credit East tax advisor to discuss not only qualifying, but also the timing of the refunds as it related to seeking an advance payment or not.

Farm Credit East continued this discussion, including helpful tips and pitfalls for employers in a blog article in late December. Click here to read part II of this article.

Read Part II

Taxes are becoming increasingly more complex every year, don’t try to navigate the waters alone. Contact a Farm Credit East tax specialist today to discuss your situation and options that may be available!

Tags: taxes, tax planning, labor