Senate Passes Bills Providing Significant Tax Relief to Help New York Small Businesses and Farmers

April 11, 2016

The New York State Senate today passed three measures to reduce the tax burden facing small businesses and farmers so that they can have more resources to invest, grow, and create jobs. The bills significantly expand income tax exemptions to reduce small business costs and substantially increase the Farm Workforce Retention Credit to help provide additional relief to support New York’s critically important agriculture industry.

A bill (S7235) sponsored by Senator Tom O’Mara (R-C, Big Flats) expands upon the current Personal Income Tax (PIT) exemptions for small businesses and farms that was originally advanced by the Senate in 2014. To currently qualify for the PIT exemptions, the business must be a sole proprietor or farm (regardless of how the business is structured, sole proprietor, LLC, etc.), have less than $250,000 in net business income and employ at least one employee. The current exemption is equal to five percent of net income in 2016 and beyond.

The legislation passed today increases the PIT exemption from 5 percent to 20 percent for farm income beginning on or after January 1, 2017; increases the PIT exemption from 5 percent to 15 percent for small businesses; eliminates the employee qualification; raises the income eligibility threshold from $250,000 to $500,000; and expands small business eligibility to include any business that files under PIT (regardless of how the business is structured, sole proprietor, LLC, etc.)

The bill also reduces the Corporate Franchise Tax business income rate for small businesses from 6.5 percent to 2.5 percent. It would increase the threshold for corporations to be considered small corporations from $290,000 to $400,000 and allows businesses with incomes between $400,000 and $500,000 to have a blended rate between 6.5 percent and 2.5 percent.

Senator O’Mara said, “A just-released WalletHub study continues to recognize New York as the state with the highest tax burden in the nation. It remains an unfair and unreasonable burden on individual taxpayers, families, employers and workers. Even with the tax cuts we successfully achieved as part of this year's state budget, we have to keep taking tax relief actions like these for our farmers, small business owners, and every other taxpayer.  This legislation in particular provides for an even greater, twenty-percent exemption of business income for farmers.”

Two other measures passed by the Senate would significantly increase the Farm Workforce Retention Credit that allows eligible farm employers to claim a refundable tax credit for each farm employee that is employed for 500 or more hours each year.

Legislation (S7236) sponsored by Senator Patricia Ritchie (R-C, Heuvelton) would double the credit included in the 2016-17 state budget for farms statewide. The increase would be phased in to include: $500 per eligible farm employee in 2017; $600 in 2018; $800 in 2019; $1,000 in 2020; and $1,200 in 2021.

Senator Ritchie, Chair of the Senate Agriculture Committee, said, “Keeping fresh, quality, local food on our tables requires strong farms, a healthy agriculture economy and a reliable workforce. Rising wages threaten farmers’ bottom lines, and this bill helps family farmers by mitigating the impact of increased costs, while also allowing farming to remain competitive in attracting and retaining a trained, reliable workforce.”

A bill (S7158A) sponsored by Senator Kenneth LaValle (R-C-I, Port Jefferson) would significantly increase the credit for farms located within Nassau and Suffolk counties. This increase would be phased in to include: $600 per eligible farm employee in 2017; $900 in 2018; $1,200 in 2019; $1,500 in 2020; and $1,500 in 2021.  

Senator LaValle said, “During the minimum wage debate, I fought to ensure that the Long Island farming community would be protected. The farm tax credit that was approved was insufficient to adequately deal with the impact upon Long Island farmers. My legislation, which passed the Senate with bipartisan support, would provide much needed relief for the farmers. This increase in the credit amount will be more equitable for these farmers who compete in a regional commodity market.”

In addition to the Farm Workforce Retention Credit, the 2016-17 state budget included other initiatives to support the growth of New York’s agriculture industry and help family farms succeed. The Senate was able to restore more than $9 million for 30 important agriculture programs that were cut in the Executive Budget proposal.

The Senate also successfully advocated for a new tax cut that totals $6.6 billion over the first four years and brings middle class income taxes down to the lowest rate since 1948. By 2025 when the tax cut is fully phased in, it will provide an average savings of $700 per taxpayer per year – including many small businesses and farmers filing under the PIT -- for an annual total savings of $4.2 billion.

The bills will be sent to the Assembly.

Senators Involved