Highlights from the Fiscal Year 2026-2027 NYS Budget

Following three-months of delays, the New York State legislature has passed the Fiscal Year 2026-2027 (FY 26-27) budget. The final budget, signed into law by Gov. Kathy Hocul, includes many provisions relevant to our farm and agribusiness customers. The following are a few highlights of the recently passed legislation.

Extension of Refundable Investment Tax Credit for Farmers

Farmers across New York State have benefitted from the investment tax credit, which provides for a 20% refundable credit on eligible purchases made by an eligible farmer. The FY 26-27 budget extends this refundable credit until January 1, 2033. When the state budget originally made ITC fully refundable at the 20% rate for eligible farmers, the provision was set to expire at the end of 2027. For a more in-depth overview of this credit, review this previous blog post (New York Farmers and Refundable Investment Tax Credit).

Expansion of Farm Donations to Food Pantries Credit

An eligible farmer has, since 2018, been able to take advantage of the Farm Donation to Food Pantries Credit. Historically, this refundable credit was calculated as 25% of the fair market value of the qualified donations, up to $5,000. The FY 26-27 budget expands this credit to 50% of the fair market value of qualified donations, up to a maximum $20,000 credit for tax years beginning on or after January 1, 2026.  In the case of a partnership or S-Corporation, the $20,000 credit limit is applied at the entity level, so the aggregate credit allowed to all partners or shareholders does not exceed $20,000.

Example

Wayne’s only source of income for 2026 is $230,000 schedule F profit from his orchard. Because Wayne’s income is entirely from farming, he qualifies as an eligible farmer. If Wayne donates $30,000 of apples to an eligible food pantry, he will receive a refundable credit of $15,000.

In order to claim this refundable tax credit, an eligible farmer must obtain a receipt from the food pantry that shows: the name of the food pantry; the date and location of the qualified donation; and a reasonably detailed description of the qualified donation.

Standardization of “Eligible Farmer” Definition

Understanding who is an eligible farmer for certain NYS tax credits has been a bit confusing as different definitions have applied for different credits. With the FY 26-27 budget a single definition of an eligible farmer has been established for these tax credits: Farm Workforce Retention Credit, Farm Employer Overtime Credit and the Farmers’ School Tax Credit.

For the purposes of these credits, an eligible farmer means a taxpayer whose New York gross income from farming for the taxable year, or whose average New York gross income from farming for the current year and two prior taxable years, is at least two-thirds of such taxpayer's federal gross income from all sources less thirty thousand dollars.

New York gross income from farming is defined as:

• a taxpayer’s federal gross income from farming,
• plus payments from the state farmland protection program,
• plus income from commercial horse boarding operations,
• plus income from the production or sale of maple syrup,
• plus income from Christmas trees,
• plus income from cider or wine produced by a licensed New York farm cidery or winery.

$30 million Tariff Relief Fund

The FY 26-27 budget established $30 million in funds set aside for direct tariff relief for NYS farmers to offset increased costs for fertilizer, equipment and supplies. These funds will help offset financial losses in an industry that has been impacted by federal tariff policies.

As more details about the implementation and availability of these funds become available, we will share those with you.