Extends partial eligibility (one-half) for the agricultural property tax credit to farmers having income from farming at least 40% of, but less than 2/3 of income

Section 2: Amends Tax Law section 210 (22)(g), (e), and (h) to make technical changes to implement section 1 of this bill.

Sections 3 and 4: Amends Tax Law section 606(n), which levies the personal income tax, to grant a partial agricultural property tax credit for school district property taxes paid on qualified agricultural property used by a grower to produce crops. To qualify for this partial agricultural property tax credit, the farmer must earn at least 40 percent but no more than 2/3 of the family's federal gross income from such land. The grower would receive as a tax credit, one-half of the cost of the grower's school tax bill levied on qualified agricultural property.

Section 5: The Commissioner of Taxation & Finance is authorized to promulgate rules necessary to implement this act.

Existing law

Under current law, a grower that earns at least 2/3 of their federal gross income from the farm is eligible for a full tax credit for school district property taxes levied, while those earning less than 2/3 of their income on the farm receive no such credit.

Justification

Current law provides that farmers that earn at least 2/3 of their federally adjusted gross income on the farm are eligible for a full tax credit refund on the amount of school real property taxes paid on qualified agricultural property. The law does not contemplate or recognize that there are a substantial number of farmers that earn a significant amount, but less than two-thirds of their family's income off the land. Since farm incomes have not increased as rapidly as those in many other sectors of the economy, farmers and members of a farmer's family have obtained part-time jobs off the farm to earn more money or to secure health insurance benefits. For example, a grower may have a part-time job driving a school bus in the morning and his or her spouse may be employed as a school teacher or health care provider to earn additional income for the family or to obtain health insurance benefits.

By virtue of securing off farm employment, a farmer's family may earn more than a third of their federally adjusted gross income off the farm which makes them completely ineligible for any tax credit on the real property taxes paid for schools. This bill would grant a partial school tax credit on a grower's income or corporate franchise taxes if the grower earns a substantial portion of his or her income from farming the land.

Forty years ago, a grower, more likely than not, worked full time on his or her 30 - 60 acre farm to earn a living. However, with advances in cultivation practices and mechanized equipment, more and more growers do not need to work full time to operate a same 30 - 60 acre farm. The current law, in effect, grants tax credits to large farms (i.e. 100 acres or more) that have full time operators, but has begun to exclude an increasing number of part-time farmers that still operate smaller 50 acre farms on a part-time basis. This bill readjusts the law to reflect changes in the agricultural community which now has a higher proportion of farmers that spend less than 100 percent of their time working on the farm. This measure should help to retain smaller family run farm operations.

This bill would help to retain small farms, open spaces, and working landscapes. The retention of working landscapes is particularly important in parts of the Hudson Valley, Long Island, and other areas of the state experiencing rapid suburban development pressures. In these areas of the state, irreplaceable farm acreage is being lost at an alarmingly high rate.

This bill should help to slow down the rapid loss of farmland. Further, it should help to stabilize the escalating demands for additional municipal services in areas that are experiencing high suburban growth and population increases. This increasing demand for more municipal services and school district capacity tends to lead to higher real property tax rates which, in turn leads to the further loss of more farmland.

Legislative history

S.4017-A of 2005/2006 S.427 of 2007/2008

Fiscal implications

To be determined.

Local fiscal implications

None.

Effective date

This act shall take effect immediately and shall apply to the taxable year on the January 1st after such act was signed into law.