Agricultural Exemptions

July 23, 2023

What is an agricultural exemption?

In Texas, an agricultural (ag) exemption, also known as a farm and ranch exemption, is a property tax benefit granted to landowners who actively use their land for agricultural purposes.

The Texas agricultural exemption is not technically an exemption. It is a county appraisal district assessment valuation based on agricultural use. Therefore, it is actually an agricultural appraisal. Landowners may apply for this special appraisal status based on their land's productivity value rather than on what the land would sell for on the open market. Typically, a productivity value is lower than the market value, which results in a lower property tax. Landowners must use their land for agriculture. There is a rollback tax for taking agricultural land out of its productivity use. This exemption provides a reduced property tax rate for land used primarily for farming, ranching, or other agricultural activities.

To qualify for an ag exemption in Texas, the landowner must meet specific criteria set by the Texas Constitution, statutes, and local appraisal district guidelines. Some key requirements include:

1. Agricultural Use: The land must be actively used for agriculture, such as cultivating crops, raising livestock, or producing timber. The primary use of the land should be for commercial agricultural purposes rather than personal or recreational use.

2. Minimum Acreage: There is typically a minimum acreage requirement to qualify for the ag exemption, which can vary by county. For example, it could be at least 5 acres or more, depending on the county's guidelines.

3. Income Threshold: The land should generate a certain amount of agricultural income or demonstrate an intent to generate income in the future. This income threshold may vary by county and is often based on the land's size and location.

4. Documentation and Reporting: Landowners need to maintain adequate records and provide documentation to support their agricultural activities, such as income and expense records, production records, lease agreements, or other relevant documents. They may also need to submit annual reports or applications to the local county appraisal district.

It's important to note that an ag exemption applies to the land's assessed value, not the entire property. Any improvements or structures on the land, such as a house or barn, may not be eligible for the exemption and would be assessed separately.

Obtaining an ag exemption can result in significant property tax savings for qualifying landowners. However, the specific requirements and application process can vary by county. It is recommended to consult with the local county appraisal district or a qualified agricultural tax specialist to understand the eligibility criteria and application process specific to your area.