A familiar refrain is back in vogue: “Property taxes on my farmland are too high.” Especially with falling commodity prices, farmers feel the pinch when they see the numbers on property tax bills coming out this spring.
Get ready for sticker shock. According to Katrina Hall, senior director of policy strategy and advocacy for Indiana Farm Bureau, farmland taxes rose 17% in 2023, but will be up 27% in 2024. For example, if you paid $30 per acre last year, expect to pay over $38 per acre this year.
Why the sharp increase? Is there any relief in sight?
Indiana Prairie Farmer took these questions directly to Randy Kron, president of INFB. Kron farms with his wife, Joyce, and son, Ben, near Evansville, Ind. Here is that discussion:
Farmers thought INFB took care of property taxes once before. Why are property tax bills escalating again? You are right. Indiana Farm Bureau made a major push for property tax relief for farmland owners eight years ago. The Indiana General Assembly acted, and farmers saw substantially lower property tax bills on farmland. We are still very grateful for the support INFB and agriculture in general received during that time.
The problem now is that because of a couple very good years in agriculture, the formula used to determine the assessed value of farmland is sending tax bills higher again. What was done eight years ago is still very important. Now, we just need to tweak the rules some more.
Why are property taxes rising now when corn and soybean prices are lower than a year ago? Two important factors in the farmland assessed value formula are net farm income and cash rent. Both are up compared to a few years ago. The years of 2021, 2022 and even 2023 were good overall for farm income, and cash rents are higher. The kicker is that the formula is based on the past six years, with the highest year dropped for calculation purposes. So, it is always behind a bit compared to real time.
So, can farmers expect lower property taxes soon based on the formula? No, the good years must still cycle through. There will be property tax increases again in ’25 and ’26 unless the law is changed. However, they won’t be as large as the 27% increase this year.
What is INFB doing to address high farmland property taxes? We established a tax task force within INFB, and they are already meeting. Their charge is to develop suggested solutions. In addition, we made legislators aware that property tax bills shot up significantly, and that farmers need relief.
When will property tax relief for farmers come? There was a move late in the 2024 short session to adjust the tax formula to provide some relief. However, numerous state senators were concerned about how the tax burden might shift to others if action was taken. In the end, no relief was granted, but a summer study committee was established to look at property taxes issues heading into the 2025 budget session. That gives everyone more time to study options and get the solution right next year.