Modernizing the Current Use Agriculture Program for Small Farms
Proposal for the 2013 Legislature
The Current Use Property Tax Program Recognizes the Importance of Farmland in this State
In 1968 the people of the state passed a constitutional amendment recognizing that farmland should be taxed at “current use” instead of fair market value. The goal in 1968 was to encourage the preservation of farmland by lowering property tax assessments, thereby lowering the cost of doing business.
Eligibility Requires Active Farming
Under the program farm land is classified by size; small farms are those under 20 acres and large farms are 20 acres and over. All farms in the program must be engaged in commercial activities. Small farms have specific income requirements of minimum dollars per acre, which are in place to establish the farm is not a hobby farm.
Large Farms Get Tax Relief for All Their Land – Small Farms Need the Same Tax Treatment
All of the land on a large farm, including the land under a farm residence and integral to the farm operation, is taxed at current use. Including all of the land makes sense because it all contributes to the farm activity. Yet, today small farms have to pay fair market value on one acre around their farmstead regardless of the use of the land.
Small Farms – Taxing the Land under the Farmstead Does not Make Sense
- Small farms are taxed at fair market value for a one acre residential lot around their farm residence; a one acre lot that does not exist and cannot be sold.
- Fair Market Value of this one acre residential lot is a financial burden to small farmers in our urbanizing areas, along our transportation corridors, and throughout the state.
The Proposal – Tax Small and Large Farms the Same – The farmstead is important to all farms
All sizes of farms should be eligible for the same tax treatment. If the residence is integral to the farming operation then the land under the farm residence should be taxed at current use, not fair market value.
Fiscal Impact – Modest Shift and Loss – Important Community Investment in Preserving Farm Land
- This proposal will result in a shift of property taxes to all taxpayers in the taxing district, including farmers.
- This proposal will result in a loss of property taxes to local governments. The loss varies across counties, with the highest losses in King and Clark Counties.
- The table below shows for each county the estimated yearly impact on a hypothetical taxpayer with a $200,000 residence.
|County||Average Tax Increase for a $200,000 Home|