LANDOWNER RESOURCES_Tax Management

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Tax Management

Landowners, like other taxpayers, are subject to a variety of taxes at all levels of government. At the federal level, these can range from income taxes and Social Security, to self-employment and estate taxes. At the state and local level, the most significant taxes are on property and income.

Property taxes on farm real estate are a direct cost to landowners. USDA reports that state property taxes ranged from 40 cents per acre in New Mexico to $58.43 in Rhode

Island through 1995--the last year the agency conducted its annual agricultural real estate tax survey.

State agricultural real estate tax rates vary due to:

  • The degree to which states rely on real estate taxes as a source of local revenue
  • The extent to which states provide tax relief, such as use-value assessment, homestead and old-age exemptions, and veterans' preferences
  • Taxpayer acceptance of real estate assessments, payment schedules, and rate changes.

To encourage farming, all 50 states have preferential assessment programs in which farmland is assessed at its agricultural-use value for property tax purposes. These laws can be especially beneficial to owners of farmland near expanding urban areas, where, in some instances, taxes on farmland assessed at fair market value for residential use can exceed the net income generated from farming.

Use-value assessment laws vary by state with respect to minimum acreage requirements, minimum number of years in farming, percentage of gross annual income the landowner receives from the land. Some states, such as Wisconsin, include "claw-back" provisions in which the state imposes a conversion charge when the land changes out of ag use.

This resource section includes links to overview articles and state tax departments that explain reduced property tax programs for land that is used primarily to make a profit in farming.

Many of these documents are available in Portable Document File format. You will need a current version of Adobe Acrobat Reader to view and print the issue. If you have problems with Acrobat Reader or our PDF form, click on Troubleshooting.

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State Resources

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California

  • Programs that Compensate Landowners – 2004 Univ. of Calif.-Davis

Illinois

  • Farmland Assessments in Illinois – Illinois Chief County Assessment Officers
  • Farmland Assessments Information Page – Ill. Dept. of Revenue

Indiana

  • Farm Land Assessment for Property Taxes - 4/10 Purdue Univ.

Iowa

  • Summary of Iowa Beginning Farmer Tax Credit Program (Iowa State Univ.)
  • Income Tax Aspects of Property Transfers – Iowa State Univ.
  • So You Have Inherited a Farm – Iowa State Univ.

Missouri

  • Ag Tax Tidbits (Univ. of Missouri)
  • The Property Tax in Missouri – Stone County Tax Assessor
  • Missouri Rejects Plan to Change Farmland Taxes – 1/10 AP

Nebraska

  • Real Estate Assessment and Tax Breaks: Reality or Myth? (6/06, Univ. of Nebraska)

New Jersey

  • Preferential Assessment for Farmland – New Jersey Future

New York

  • Property Tax Exemption for Farmland – 6/07 Cornell Univ.

North Dakota

  • Agricultural Property Tax Equity in North Dakota 3/07 (UNO Real Estate Research Center)

Ohio

  • Tax Issues for Farm Rental Agreements (3/02, Ohio State Univ.)
  • Current Agricultural Use Value Assessment in Ohio – Ohio State Univ.
  • 2010 Current Agricultural Use Value of Land Tables – Ohio Dept. of Taxation
  • Estate Planning Considerations for Ohio Families – Ohio State Univ.

Oregon

  • Farmland in an Exclusive Farm-Use Zone – Ore. Dept. of Revenue

Pennsylvania

  • Farmland & Forest Land Assessment Act of 1974 – Penn State

South Dakota

  • Backgrounder on New Productivity Value Assessment Program – S.D. Dept. of Revenue

Wisconsin

  • Use Value Assessment of Agricultural Land – 7/10 Legislative Audit Bureau
  • 2010 Agricultural Assessment Guide for Wisconsin Property Owners
  • Farmland Preservation Credit – Wisconsin Dept. of Revenue

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California

Illinois

Indiana

Iowa

Missouri

Nebraska

New Jersey

New York

North Dakota

Ohio

Oregon

Pennsylvania

South Dakota

Wisconsin

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Overview Articles

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  • USDA Briefing Room: Taxes Paid by Farmers
  • USDA Briefing Room: Federal Estate Taxes: Special Provisions for Agricultural Landowners
  • 50-State Property Tax Comparison Study, Payable Year 2009 – Minnesota Taxpayers Assn.
  • State Farmland Preferential Assessment: A Comparative Study – 2004, J. of Regional Policy Analysis
  • USDA - Farm Real Estate Values, Rents & Taxes, 1996
  • Farmland Tax Break Loophole - State Environmental Resource Center
  • Conservation Easements/Transfer of Development Rights:
    Farmland Information Center

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