Supporting New York Farmers with the Investment Tax Credit (ITC)

New York farmers form the backbone of our state’s agricultural industry, delivering fresh produce, dairy, and more to communities across the state. At Dragoon’s Farm Equipment, we’re committed to helping farmers succeed—not only by supplying durable equipment, but by keeping you informed about tax incentives and programs that can lower the cost of investment. One valuable opportunity is New York State’s Investment Tax Credit (ITC), which was expanded for farmers beginning in 2022 and updated with refundable treatment for certain qualifying investments.

What is the New York State Investment Tax Credit?

The New York ITC provides a credit based on eligible capital investments placed in service in the state. For property placed in service on or after April 1, 2022, eligible farmers may qualify for a 20% investment tax credit on the investment credit base for qualifying property. That expanded 20% rate is specific to qualifying property used principally in farming and placed in service on or after April 1, 2022.

Who is an “eligible farmer”?

To claim the higher 20% rate, the taxpayer (at the entity level) must meet New York’s eligible-farmer test. The test generally requires that farm-related receipts make up at least two-thirds (66.67%) of the entity’s excess federal gross income; NYS provides worksheets for different entity types and a three-year averaging method if needed. If the worksheet decimal is less than 0.6667, the entity does not qualify as an eligible farmer for the 20% rate. Review the NYS worksheets for your entity type before claiming the higher rate.

Refundability and carryover — what changed and what that means

• For certain eligible farmers, the ITC may be refundable for qualifying property placed in service on or after January 1, 2023. That change makes the credit more useful to farms that do not have a large New York tax liability in the year the property is placed in service.
• Per New York’s FY2025 materials, refundability applies only to credit claimed for property placed in service on or after Jan. 1, 2023 and before Jan. 1, 2028. Property placed in service before Jan. 1, 2023 remains eligible for the ITC if otherwise qualifying, but those earlier credits are nonrefundable and generally must be carried forward under the existing rules. Consult your tax advisor about carryforwards and timing.

What typically qualifies?

Qualifying property generally includes depreciable tangible personal property and certain structural components used in production by farming—examples commonly used on farms include:

• Tractors, combines, planters and other field equipment
• Livestock facilities, single-purpose agricultural structures (as applicable)
• Processing or production machinery used directly in farm production

Always confirm whether a particular asset qualifies and how it should be treated on Form IT-212 or CT-46.

Recordkeeping & forms

Taxpayers must maintain documentation supporting entitlement to the credit (invoices, placement-in-service evidence, business-use records, and the eligible-farmer worksheet as applicable). Claiming the ITC uses Form IT-212 (Investment Credit) for individuals/most filers and Form CT-46 for corporations; review the instructions for each form.

How Dragoon’s Farm Equipment can help

We know farming requires capital investment—and timing those investments to capture tax incentives is often as important as the equipment itself. Our team can work with you to:

• Identify equipment that typically qualifies for the ITC,
• Coordinate delivery and setup so equipment is properly placed in service, and
• Provide the purchase documentation you’ll need for your tax records.

Bottom line and next steps

The NYS ITC can substantially lower the after-tax cost of qualifying farm investments—especially now that the credit is available at a 20% rate for property placed in service on or after April 1, 2022, and that refundable treatment is available for eligible farmers for property placed in service on or after Jan. 1, 2023 (through property placed in service before Jan. 1, 2028). Because eligibility depends on entity-level tests, placement-in-service timing, and documentation, consult your tax professional before claiming the credit. If you’d like, Dragoon’s can prepare invoices and placement documentation aligned with your accountant’s needs.

Disclaimer: This article is for informational purposes only and is not tax or legal advice. Always consult a qualified tax professional for advice tailored to your circumstances.

Resources

• NYS Department of Taxation and Finance — Investment tax credit (ITC) overview. NY Dept of Taxation and Finance
• NYS — Investment tax credit: eligible farmers income test (worksheets & definitions). NY Dept of Taxation and Finance
• NYS Instructions / Forms — Form IT-212 (Investment Credit) instructions. NY Dept of Taxation and Finance
• FY2025 New York State tax expenditure / policy materials (summarizes refundability through property placed in service before Jan. 1, 2028). NY Dept of Taxation and Finance

Together, we can ensure New York’s farmers continue to thrive for generations.