Introduction
Texas offers agricultural property tax exemptions that allow farmers, ranchers, and landowners to significantly reduce their property tax bills. These exemptions, known as agricultural valuation (Ag Exemptions), Open-Space (1-d-1), and Wildlife Management Use, provide lower tax rates for qualifying landowners.
This guide explains who qualifies, how to apply, and how much you can save.
What Is a Texas Agricultural Property Tax Exemption?
The Texas Agricultural Exemption is not a full exemption but a special valuation that allows farmland, ranchland, and timberland to be taxed based on productive agricultural value instead of market value.
There are two primary exemptions:
- 1-d Agricultural Valuation – For landowners whose primary income is from agriculture.
- 1-d-1 Open-Space Valuation – For land primarily used for agriculture, even if it’s not the landowner’s primary income.
Who Qualifies for Texas Agricultural Property Tax Exemptions?
Eligibility Criteria
To qualify, your land must:
- Be actively used for agriculture, livestock, timber, or wildlife management.
- Meet the minimum acreage requirements set by the county.
- Be used for agricultural purposes for at least 5 out of the past 7 years.
Qualifying Agricultural Uses
- Cattle, sheep, or goat grazing
- Timber production
- Crop farming (corn, wheat, cotton, etc.)
- Orchards & vineyards
- Beehives (with at least 5 acres)
- Wildlife management (if land was previously agricultural)
Minimum Land Size Requirements
- Varies by county and land use.
- Most counties require at least 10 acres for standard agricultural exemptions.
- Beekeeping requires 5-20 acres, depending on the county.
How Much Can You Save?
Land Type Market Value Tax Ag Exemption Tax (Estimated) Savings
100 Acres (Market Value: $500,000) $10,000/year $1,500/year $8,500/year
50 Acres (Market Value: $250,000) $5,000/year $750/year $4,250/year
Savings vary by county appraisal district and land use.
How to Apply for a Texas Agricultural Property Tax Exemption
Step 1: Obtain the Required Forms
- Form 50-129 (1-d-1 Agricultural Use Appraisal Application).
- Additional county-specific documentation may be required.
Step 2: Submit Your Application to Your County Appraisal District
- File by April 30 of the tax year.
- If you miss the deadline, you may request a late application with a penalty of 10% of the tax savings.
Step 3: Provide Supporting Documents
- Proof of agricultural activity for at least 5 out of the last 7 years.
- Receipts for livestock, feed, fencing, or crop production.
- Farm lease agreements (if applicable).
Step 4: Maintain Agricultural Use to Keep Exemption
- Counties audit properties periodically.
- If land use changes, you may lose the exemption and face rollback taxes.
What Is the Texas Wildlife Management Use Exemption?
Landowners can convert agricultural land into wildlife management use and still keep tax savings.
Requirements:
- Land must have previously qualified for agricultural exemption.
- Must engage in wildlife preservation activities (habitat improvement, erosion control, etc.).
- File Form 50-129 (Wildlife Management Use Application) with the county.
What Are Texas Rollback Taxes?
If you stop agricultural use, you may face rollback taxes, which require you to pay the last 5 years of property taxes at full market value, plus interest.
Avoiding Rollback Taxes:
- Keep land in qualifying agricultural use.
- Transition to wildlife management if not farming.
Can Businesses Qualify for Ag Exemptions?
Yes, businesses engaged in agriculture, ranching, or timber production can claim these exemptions if land use qualifies.
Common Business Uses That Qualify:
- Cattle ranching & dairy farms
- Vineyards & wineries
- Tree farms & timber operations
- Beehive honey production
Common Mistakes That Cause Landowners to Lose Exemptions
- Not maintaining proper land use documentation.
- Failing to reapply when required by the county.
- Developing the land for non-agricultural purposes.
Should You Work with a CPA for Agricultural Tax Planning?
A CPA can help:
- Ensure you meet eligibility requirements for exemptions.
- Prepare accurate documentation to prevent audits or rollback taxes.
- Identify additional tax savings for agriculture-based businesses.
Conclusion
Texas offers valuable agricultural property tax exemptions for landowners engaged in farming, ranching, timber production, and wildlife conservation. To qualify, land must meet minimum use requirements and maintain agricultural activity for 5 out of 7 years. Proper documentation and timely filing are key to maximizing tax savings and avoiding rollback taxes.
For expert guidance on agricultural tax planning, schedule a meeting with our CPA Anshul Goyal by clicking at https://calendly.com/anshulcpa/ now.