The application period for the 2023 Oregon Agricultural Employer Overtime Tax Credit closes on January 31, 2024.
Certain agricultural employers who paid overtime wages in 2023, either directly or through farm labor contractors, may be eligible to apply for a refundable Oregon income tax credit for the 2023 tax year. The application window is currently open and will close on January 31, 2024.
Here are a few important aspects of the credit to keep in mind:
- The credit was approved by House Bill 4002 in February 2022 and is available for tax years 2022 through 2028.
- The purpose of the credit is to help defray the costs agricultural employers incur for paying overtime wages for agricultural workers in Oregon.
- All applications must be submitted via Oregon Revenue Online.
- The online application requires substantial documentation.
- While farm labor contractors are not eligible to claim the credit, agricultural businesses that contract with licensed farm labor contractors can claim a credit based on the overtime paid by the farm labor contractor.
- The credit is determined by determining the overtime dollars paid to agricultural workers in excess of an hour threshold multiplied by a credit percentage. The hour threshold and credit percentage are different by tax year, and there are further distinctions if the business is a dairy or non-dairy business and whether the company has less than 25 or 50 FTEs.
- Family members and administrative employee wages are not eligible for the credit. Other restrictions include per-piece rate laborers and salaried livestock employees (see 653.020). You can find other rules concerning overtime pay and eligible employers on the Bureau of Labor & Industries website.
- There is a $55 million annual cap for the credit. If the total amount of tax credit applications exceeds $55 million per year, the department must proportionately reduce the amount of credits among all approved applicants.
- Agricultural employers need to apply before January 31 each year. Credits will be approved, and notice of approval will be sent to agricultural employers by June 1 each year.
- The Oregon Department of Revenue plans to send denial letters by February 15, and taxpayers may appeal within 30 days of the denial letter date. Final determinations for appeals will be completed by mid-May.
- Employers applying for the credit will receive an automatic extension for filing the Oregon income tax return.
- Individuals, corporations, or pass-through entities can claim the credit.
- The credit is a refundable tax credit, which means any credit amount in excess of the taxpayer’s Oregon tax liability will be refunded.
- Other overtime-related repayable awards may be available through Business Oregon.
Is your agricultural business eligible for this credit? Contact our experts, like Nick Prelog, to capitalize on the maximum benefits available.