Revisiting the NYS Farm Employer Overtime Credit for 2026

In December 2023, we shared New York Farm Employer Overtime Credit: Part I and Part II, two initial Tax Talks blog articles detailing the New York Farm Employer Overtime Credit ahead of the first tax year that the credit was available. Now in 2026, with the busy season of farm work ahead of us, we are sharing some important reminders and updates to this credit for 2026.

As a reminder, you or your business is eligible for this refundable credit if you:

• Qualify as an eligible farmer; and
  • Employ eligible farm employees that you paid eligible overtime; or
  • Directly or indirectly, through a Professional Employer Organization (PEO), paid eligible overtime wages to eligible farm employees. 

The credit is 118% of the eligible overtime hours you or your business paid, multiplied by the difference between the employees’ overtime rate of pay and their regular rate of pay.

As of January 1, 2026, agricultural employees in New York State must receive overtime pay for any hours worked in excess of 52 hours in a calendar week. This is the second of five reductions as the threshold moves from the historical 60 hours to 40 hours by 2032. As such, the Farm Employer Overtime Credit is expanded to capture eligible overtime as hours worked in excess of 52 hours and no more than 60 hours, for a maximum of 8 eligible hours of overtime each week beginning in 2026.

Qualified Farm Employers should ensure their payroll systems are updated to reflect the increase in eligible hours while being cautious to ensure this tracking is not confused with Qualified Overtime under the Fair Labor Standards Act that may be built into existing payroll software (see our previous article for a discussion of who is eligible for the Federal OT deduction).

With this increase in eligible overtime hours, more farm employers may be interested in taking advantage of the advance payment option offered through the New York State Department of Agriculture and Markets (AGM) in conjunction with the Department of Tax and Finance. You may apply to receive an advance on the credit for eligible overtime paid from January 1 – July 31 annually when the application is available between August 1– September 30. Once the application is approved, eligible farmers will receive a certificate that then can be used to request the advance payment from the Department of Tax and Finance by November 1.

Due to legislative changes in 2025, which allowed farms using a PEO to claim this credit, there will be adjustments to certain program requirements and application procedures for all farm employers claiming the credit. Beginning with the 2026 tax year, all taxpayers, regardless of using a PEO, must receive an overtime expense certification from AGM certifying their eligible overtime expense before the credit can be claimed on their 2026 tax returns. Further details on this application process are not yet available, but eligible farm employers should look for communication from AGM later in the year.