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Empire State Apprenticeship Tax Credit program

In 2018, New York introduced the Empire State Apprenticeship Tax Credit Program. The tax credit is available to employers in select industries who hire an apprentice to learn their trade/business. The “Apprentice” is an employee who fits certain qualifications described below. In the agricultural sector, the credit is currently only available to nurseries, however after a discussion in New York State, there is the possibility of extending the credit to the dairy and winery industries.

How would someone apply for this credit? On a basic level, the employer must register for the apprenticeship program with New York State before they can receive the credit. This is done by creating a program for how the hours worked by the employee will contribute to the employee’s learning of the trade, or by using a preset program (click this link to see an example).

Next, contact your apprentice training representative (representatives vary by location). Once contacted, a meeting can be set up for the apprenticeship program to undergo an initial assessment. If the initial assessment is approved, the program can be submitted online and the employee(s) can register to become your apprentice.

Annually, employees in the apprenticeship program must work a minimum of six months at full time (35 hours a week) and receive 144 hours of “Classroom Work,” for a total of 984 hours worked. The classroom work can be done onsite or in various applicable courses. There is a good deal of work the first year to set up the credit, but after the first year with the program in place, the credit is easy to maintain.

Now on the fun part, the tax credit! The credit is broken into two groups: a group everyone can qualify for and a disadvantaged youth group. Regardless of the group, the apprentice has to go through the same program to qualify.

As you can see, both credits are lucrative, but the disadvantaged youth credit is noticeably larger, particularly over the multi-year period. The criteria to fit into the disadvantaged youth apprentice program requires hiring someone between the ages of 18 and 24 who meets one of the criteria listed here. It does not require anything additional. However, apprentice(s) should be chosen based on merit and not the group they fall into. Remember, the intent is to grow this apprentice into a skilled employee, so you want to ensure your apprentice is the best fit for the job.

So, let’s put this into perspective. We’ll round the required hours up to 1,000 hours for simplicity. If an apprentice works 1,000 hours a year and qualifies for the disadvantaged youth credit, the employer would receive a $5,000 credit in the first year and effectively cut $5 per hour off their labor cost! With labor being a large driver of expenses in the agricultural sector, this could be a great incentive to keep skilled labor on the farm by providing a higher wage and a program in which the apprentice can develop lifelong skills.

This credit is fairly straightforward for nurseries to implement. Growing up on a New York nursery myself, I can say firsthand that the majority of the preset nursery program is a natural part of the business. Nurseries need an educated workforce to properly manage plants, design landscapes, and market products and services to consumers. The only additional work involved is setting up the program and the classroom learning element. If you want to take part in this program, please contact your local Farm Credit East office and we can assist you in earning this credit and improving your workforce.

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