Taxes/Ag-Exemptions for Your Land

What is Agricultural Appraisal? 

It is a special tax appraisal that generally results in a much lower taxable value, and consequently a lower tax bill, than would result using standard market value appraisal methods. Local governments such as cities, counties, and school districts raise a large portion of their operating revenues through the levying of ad valorem property taxes, or taxes based upon the value of property. Texas property tax laws give some special considerations to agricultural land if the owner files a valid application and provides that the land meets certain qualifications. You may know this special consideration by the name of agricultural tax exemption, but instead of a true exemption, it is actually a special method of valuation. 

The Comptroller’s Manual for the Appraisal of Agricultural Land (PDF) explains the eligibility requirements and the appraisal procedures for agricultural land, as provided by Tax Code Chapter 23, Subchapters C and D, and is adopted by the Texas Comptroller of Public Accounts under Comptroller Rule 9.4001 as required by Tax Code Section 23.52(d).

Property owners may qualify for agricultural appraisal if land meets the following criteria:

• The land must be currently devoted principally to agricultural use. Agricultural use includes but is not limited to the following activities: cultivating the soil, producing crops, raising or keeping livestock, poultry, fish or planting cover crops. It also can include leaving the land idle while participating in a government program or for normal crop or livestock rotation. Land used for raising certain exotic animals (including exotic birds) to produce human food or other items of commercial value qualifies. Cutting wood for use in fences or structures on adjacent agricultural land also qualifies.
• Using land for wildlife management is an agricultural use, if such land was previously qualified open-space land or timberland and is actively used for wildlife management. Wildlife management land must be used in at least three of seven specific ways to propagate a sustaining breeding, migrating or wintering population of indigenous wild animals for human use.
• Agricultural land must be currently devoted principally to agricultural use to the degree of intensity generally accepted in the area.
• The land must have been devoted to agricultural or timber production for at least five of the past seven years. However, land within an incorporated city or town must meet not only the criteria applicable to 1-d-1 land but also must meet one of the following additional criteria:
  • The city or town must not provide the land with general services comparable to those provided in other parts of the city or town having similar features and population.
  • The land must have been devoted principally to agricultural use continuously for the preceding five years.
  • The land has been devoted principally to agricultural use or to the production of timber or forest products continuously for the preceding five years and the land is used for wildlife management.

The application for special appraisal as land qualified open-space agricultural use is Form 50-129, Application for 1-d-1 (Open-Space) Agricultural Use (PDF). The application for special appraisal of land based on its capacity to produce agricultural products is Form 50-165, Application for 1-d Agricultural Appraisal (PDF). The application for special appraisal for ecological laboratories is Form 50-166, Application for Open Space Land Appraisal for Ecological Laboratories (PDF).

What is an Ag-Exemption?

Farmers, ranchers and timber producers can claim exemptions from some Texas taxes when purchasing certain items used exclusively to produce agriculture and timber products for sale. 

Who qualifies for an Ag-exemption exemption? 

If you are a farmer, rancher or timber producer engaged in one of the activities listed below, you qualify for tax exemption on the purchase of certain items used to produce your agricultural and timber products for sale. All purchases, including non-Texas residents, must have a valid agricultural and timber registration number (Ag/Timber Number) issued by the comptroller to claim exemption from Texas tax. If you do not have a valid Ag/Timber Number, you must pay tax to retailers on your purchases. Your business type must be listed to qualify for tax exemption on certain items or for an Ag/Timber Number. 

What activities qualify for an ag-exemption?

• farming or ranching for the purpose of raising agricultural products for sale
• production of fiber crops (cotton, hemp, flax, etc.) for sale
• timber production (including contract logging)
• feedlot operation
• commercial fish farm operation
• bee keeping
• custom harvesting
• crop dusting (as defined by 14 CFR Section 137.3)
• growing plants for sale in a commercial nursery
• a veterinary business that makes farm or ranch calls
• Future Farmers of America or 4-H
• teaching an agricultural vocational course

What activities do not qualify for an ag exempetion?

• Home gardening
• horse (PDF) racing, boarding, training or trail rides
• rodeos, circuses or zoos
• florists or similar retailers who maintain plants before sale
• wildlife management and conservation
• hunting and fishing operations, including aerial hunting
• predator control
• wildlife or livestock surveys
• commercial fishing
• companion animal (pet) breeding
• kennels or other animal boarding businesses

Looking for an Ag-exempt property? Our team knows the lay of the land and would love to help you find you new outdoors escape. Get in touch with the Cedar Frame team to get started!