Objective Digital economy, as the new driving force of China's economic development, plays an important role in increasing farmers' income. Studying the relationship between the two and its mechanism can enrich the research content of digital economy and farmers' income, enrich the empirical evidence of high-quality economic development, and provide inspiration for further accelerating the implementation process of digital rural strategy.

Method Based on the perspective of upgrading of agricultural industrial structure and the panel data of 31 provinces in China from 2012 to 2021, the evaluation indicator system of digital economy was constructed, the entropy method was adopted to measure the level of digital economy. The impact of digital economy on income increase of farmers and its mechanism were explored with the help of fixed effect model and ordinary least squares (OLS).The panel threshold model was used to analyze the nonlinear spillover characteristics of digital economy to increase of farmers' income, and the quantile regression method was used to analyze the heterogeneity of digital economy to increase of farmers' income.

Result (1) Digital economy can promote the increase of farmers' incomes, and the conclusion is still valid after a series of tests such as instrumental variable method and changing sample size. Among them, digital economy has a significant promotion effect on farmers' household operation income, wage income and property income, but has no significant impact on farmers' transfer income. (2) The development of digital economy has improved the rationalization and optimization of agricultural industrial structure to promote the upgrading of agricultural industrial structure and further promote the increase of farmers' income. (3) The income-increasing effect of the digital economy has nonlinear characteristics, and the effect is further strengthened under the adjustment effect of the rationalization of agricultural industrial structure. (4) Digital economy will drive the increase of farmers' income in the long run; the effect of digital economy on the income increase of farmers at different income levels is inverted U-shaped and the middle income group is the biggest beneficiary of the development of digital economy. The driving force of the development of digital economy to the increase of farmers' income in central and western regions of China is significantly stronger than that in eastern region.

Conclusion Digital economy and the upgrading of agricultural industrial structure are the key elements to improve farmers' income level. On this basis, countermeasures and suggestions are put forward such as strengthening the construction of digital economy, innovating the integrated development mechanism of digital economy and agricultural industrial structure, improving the benefit distribution mechanism of digital economy development, and promoting the coordinated development of regional digital economy and agricultural industrial structure.