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Serving: IN

Farmland Taxes May Go Up, But Less Than Once Thought

Farmland Taxes May Go Up, But Less Than Once Thought
Change in formula saves huge amounts- doesn't lower tax bill.

Our recent article about 'real relief for land owners' brought the typical naysayers out of the woodwork. Not sparing the derogatory comments, they pointed out that their local tax bill that they just paid was higher than last year. Obviously, we didn't know what we were talking about.

The truth is in the wording, and in reading what's written, not what you want to read. The original article featuring Bob Kraft of Indiana Farm Bureau, a legislative specialist, said that the change in the farmland assessment policy passed by the legislature this spring will save farmers $75 million over the next three years. That's not a guess, those are firm calculations based on how the farmland assessment formula operates.

No matter how you spell 'r-e-l-i-e-f,' that's relief! It's money that won't leave landowner's pockets and head for the government treasury via inflated land assessment values. Indiana Farm Bureau lobbied hard for this change, and is largely credited with the primary reason why it passed. What the actual change does is have the highest year dropped out of the six-year revolving formula used to calculate assessed value on bare farmland. Since high years are in the offing due to higher prices, getting the top year kicked out and averaging on five instead of six makes a huge difference in the collective amount of money farmers and landowners will pay in property taxes over the next three years.

The problem, of course, is that this savings doesn't mean your local tax bill won't go up. You may still have paid more per acre this year than last year, and you could pay more per acre next year as well, Kraft says. Many factors go into determining local rates and amounts paid, including what other taxing entities are in your local area.

"The whole point is even if your property tax bill for farmland goes up, it won't go up as much as it would have otherwise without this change," Kraft says. "That's hard concept for some people to grasp. But if it wasn't for this change, your bills would be much higher over the next three years than they're going to be now."

It's difficult because the relief, while real, never shows up on your tax bill. There's no column that shows what your bill would have been had he formula process not been changes. But it's real all the same, Kraft concludes.

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