Estimating Agricultural Use Value for Property Tax Purposes: How do State Programs Assess Use Value?

Abstract

All fifty states in the United States provide property tax preferences for agricultural land via some form of use-value assessment. By this assessment approach agricultural land is valued in its current agricultural use, not at its full market value. The intent of this policy is to provide a preferential property tax rate for agricultural land. This method of valuing agricultural land has its challenges, however. Isolating agricultural use value as distinct from other sources of land value is more complex and difficult that it would first appear. In this paper I provide a review of the methods used by various states in their application of use-value statutes for agricultural land. My intent is to review the methods used in various state programs, to provide evaluative comments on those methods, and to make suggestions for improvements in the methods used.