Beginning in 1990, cash remuneration paid to an agricultural laborer is subject to mandatory income tax withholding. Prior to 1990, employers were not required to withhold federal income tax on wages paid to agricultural labor. However, agricultural employees could, if their employers agreed, choose voluntarily to have income tax withheld from wages. The enactment of mandatory income tax withholding plus the gradual increase in FICA tax (increasing from 7.51 percent of the first $48,000 of wages in 1989 to 7.65 percent of the first $51,300 of wages in 1990) have given added impetus to the payment of wages in kind.
Harl, Neil E.
"Paying Wages In Kind for Agricultural Labor,"
Agricultural Law Digest: Vol. 1
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol1/iss7/1