Sales Tax Exemption

If you are growing crops or livestock FOR SALE (or you are boarding horses commercially), you meet the minimum eligibility to have your farm purchases exempted from sales tax.

There is no income minimum and the exemption takes place at the time and place of sale – not filed afterwards.

New York State Department of Taxation provides an easy-to-use form and clear instructions. Download, print, and fill out Form ST-125 (below) to use each time you make a purchase for the farm, or file a blanket form with the retailer.

Your commercial farm must stand up to scrutiny if you are challenged as to whether or not you qualify for the sales tax exemption.

TIP: Make sure you have a bank account for the farm that is separate from your family checkbook. Keep detailed and well-organized farm production records, even for very small farm operations. Claim farm income on Schedule F when you file income tax documents. These will all legitimize the fact you are using the sales tax exemption for farms appropriately.

Last updated August 8, 2018