Requirements for Exempting Agricultural Property Taxes in Texas

Introduction

Discover the qualifications for achieving an agricultural property tax exemption in Texas. The Williamson Central Appraisal District (WCAD) provides guidelines for the assessment and application of the Agricultural Land Qualification, which is universally applicable in their jurisdiction. As outlined in the “Manual for the Appraisal of Agricultural Land” by the Texas Property Tax Division, these guidelines are recognized and supported by the WCAD.

The Texas Constitution allows for the taxation of qualified open-space land based on its productivity value rather than its market value. This special valuation, known as “Ag Use Open Space” or “1-d-1,” is established in Article VIII, Section 1-d-1 of the Texas Constitution. The core provisions for implementing this valuation are outlined in Sections 23.51 – 23.57 of the Texas Tax Code (TPTC).

While these guidelines serve as a general reference for qualifying agricultural land, it is important to note that exceptions may be considered on a case-by-case basis. Additionally, contiguous parcels under the same ownership will be treated as a single property.

Qualification Standards

Improvements

Agricultural value applies exclusively to the land itself and not to any improvements, such as structures, minerals, or agricultural products. However, the land underneath farm buildings and other agricultural structures can qualify for agricultural value due to their connection to the agricultural process.

Products of Agricultural Operations

In general, products held by the producer are exempt from taxation. Furthermore, farm and ranch equipment primarily used for agricultural activities are also exempt from taxation.

Appurtenances

Appurtenances to the land, including canals, water wells, roads, stock tanks, and similar reshaping of the soil, are considered part of the land’s value and are not appraised separately.

Qualifying Activities

Qualification for agricultural valuation includes a range of activities such as:

  • Cultivating the soil
  • Producing crops for human consumption, animal feed, or fiber production
  • Cultivating ornamentals, flowering plants, and grapes
  • Cultivating fruits, vegetables, flowers, herbs, and other plants
  • Raising livestock such as meat or dairy cattle, horses, goats, swine, poultry, and sheep
  • Raising exotic game for commercial purposes
  • Participating in a government program and practicing normal crop rotation (land left idle for government programs or crop rotation qualifies)
  • Engaging in wildlife management activities

Non-Qualifying Activities

Activities that do not qualify for agricultural valuation include:

  • Harvesting of native plants or wildlife
  • Processing of plants and animals beyond their primary growth or raising stage
  • Personal consumption of crops or livestock produced by the owner
  • Use of land for horse training, recreational riding, or horsekeeping not directly related to breeding or raising horses
  • Raising cattle, goats, or sheep solely for FFA and 4H projects
  • Token agricultural use initiated solely for tax relief purposes

Primary and Current Devotion to Agricultural Use

Primary Use (Qualifying)

To qualify for agricultural valuation, the land must primarily be devoted to agricultural use. If multiple uses exist, agricultural use must be the most important or primary use.

Primary Uses (Non-Qualifying)

Examples of non-qualifying primary uses include:

  • Pleasure and personal gardening
  • Exotic game primarily used for hunting
  • Land used for horse training, recreational riding, or horsekeeping not directly related to breeding or raising horses
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Current Devotion

The land must currently be devoted to agricultural use and meet the qualification requirements as of January 1. The land must maintain its qualifying use throughout the year, as the agricultural valuation can be removed at any time for non-compliance. It’s important to note that the property must be productive, with livestock, livestock offspring, or crops being produced. Simply maintaining livestock without production does not qualify the property.

Cropland Map

Land Classifications

There are three classifications of land:

  1. Cropland: Refers to land primarily used for producing crops for human consumption, animal feed, planting seed, or fiber production. In Williamson County, all cropland is considered Dry Cropland, as there is no irrigated cropland. Dry Cropland is further divided into three valuations:

    • Dry Crop 1 (DC1): Located along the eastern portion of Williamson County, characterized by the highest-producing soil types.
    • Dry Crop 2 (DC2): Located east of IH-35 and west of FM 685, Jonah, and Schwertner, characterized by medium-grade soil types.
    • Dry Crop 3 (DC3): Located west of IH-35, characterized by the poorest soil types.

    Hay production is categorized under the Cropland classification if standard practices such as tillage, fertilizing, cutting, baling, hauling, feeding, and marketing are employed. In normal years, 2-3 cuttings can be achieved, with hay production averaging approximately 3,000 lbs per acre. It’s important to note that cutting and baling unmanaged vegetation does not qualify as hay production. Johnson grass hay fields typically require light disking or chiseling in spring for enhanced growth and weed control, in addition to fertilization.

    Pastureland Map

  2. Pastureland: Encompasses native and improved pastures. Native pasture consists of natural vegetation with minimal improvements, while improved pasture involves both native and improved vegetation with enhancements such as fertilizer application, mechanical or chemical weed and brush control, and winter grass overseeding. Williamson County has four pastureland valuations:

    • Native Pasture 1 (NP1): Eastern side of the county, with IH-35 as the western boundary.
    • Improved Pasture 1 (IP1): Eastern side of the county, with IH-35 as the western boundary.
    • Native Pasture 2 (NP2): Western side of the county, with IH-35 as the eastern boundary.
    • Improved Pasture 2 (IP2): Western side of the county, with IH-35 as the eastern boundary.
  3. Wasteland: Includes land that is unsuitable for typical agricultural use. The area designated as wasteland must generally be less than 20% of the total tract of land and can include creeks, draws, or other areas deemed financially unfeasible for utilization. In cases of small tracts divided by roads, creeks, or rivers, wasteland can be part of another land classification and must be integral to one or more of the other classifications.

Degree of Intensity

The degree of intensity test evaluates whether the land is farmed or ranched to the extent typical for the area. This test is designed to exclude land where token agriculture is practiced solely for tax relief purposes. Intensity levels may vary based on geographic areas due to varying terrain, soil types, and water levels. Unique characteristics within defined geographic areas may increase or decrease the minimum level of intensity required for specific parcels. Williamson County utilizes the USDA soils book to define these areas.

Livestock Intensity

Livestock intensity is measured in animal units, with a minimum of 2 animal units required to qualify for agricultural valuation. The number of acres needed to meet the minimum animal unit varies based on the geographic area. For an estimate of the number of animals required for your property, refer to the animal estimator page.

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Acreage Requirements

The following table provides a guideline for the required number of acres to accommodate the minimum animal units:

Acreage Requirements Map

Pasture land East of IH35 (IP1/NP1)

Typical acres per animal unit Acres needed for minimum animal units
Improved Pasture 1 4 acres
Native Pasture 1 5 acres

Pasture land West of IH35 (IP2/NP2)

Typical acres per animal unit Acres needed for minimum animal units
Improved Pasture 2 8 acres
Native Pasture 2 9 acres

Beekeeping

Beekeeping qualifies as an agricultural use for productivity valuation when used for pollination or the production of human food or other valuable tangible products. The State of Texas has set a minimum requirement of five (5) acres and a maximum of twenty (20) acres for beekeeping to qualify as an agricultural use.

The minimum degree of intensity for beekeeping is determined by the number of bee colonies kept. A minimum of six or more colonies constitutes an apiary. For every additional two acres, one additional hive is required. If the additional acreage is less than two acres, no additional hive is necessary. It is essential to maintain historic records and documentation proving active honey production or leases to establish the history of agricultural use.

Orchards

While various orchards may thrive under specific conditions, Williamson County primarily supports native and improved pecan orchards. Other orchards may be feasible in certain areas, and it is recommended to consult the local Agrilife Extension Office for detailed information. The following example outlines the requirements for a pecan orchard:

  • Improved pecan orchards thrive in deep, well-drained river bottoms, upland sands, and well-drained clay soils. A soil analysis is advisable to determine suitability. Orchards typically require at least 42 inches of water annually, and a minimum of approximately 10 acres is ideal for a viable orchard. Irrigation systems should be installed to ensure proper water supply, and a schedule for pesticide and fertilizer application must be in place. Maintenance of the orchard floor, uniform tree spacing, and ongoing pest management are essential. Operating costs and production levels should align with the standards set for improved pecan orchards.

  • Native pecan orchards generally fare well in deep, well-drained alluvial soils found along waterways such as rivers and creeks. Rejuvenating a native pecan orchard involves removing non-pecan species and promoting good vegetation or groundcover on the orchard floor, considering the orchard’s secondary use, such as livestock grazing. Evaluation of trees for productivity potential and nut size is necessary, with removal of weak or unhealthy trees. New native trees may be added as replacements. Tree management, pest management, and appropriate investment during productive years are crucial. Hunting should be part of the management plan to mitigate damage caused by animals such as deer, raccoons, crows, and turkey. Operating costs and production levels should align with native pecan orchard standards.

  • Orchards generally adhere to standard practices, including tree spacing, weed control, water management, insect control, pruning, and harvesting. Orchards must be wholesale operations.

Tree Spacing

Wildlife Management Special Valuation

Wildlife Management offers an alternative property valuation method for land used to propagate indigenous wild animals for sustaining, breeding, migrating, or wintering populations. A Wildlife Management Plan must be completed for each tract of land seeking valuation based on wildlife management. Forms and regional management plans are available through the Texas Parks and Wildlife Department (TPWD). The land classifications for wildlife management align with regular agricultural valuations. The TPWD website and Wildlife Annual Reports and Plans provide additional information.

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Time Period Test

To meet the history requirement or time test, the land must have maintained agricultural valuation for the specified period. Land outside incorporated cities must have qualified for agricultural valuation for five (5) of the last seven (7) years, while land within incorporated cities must have qualified for five (5) consecutive years. If a property fails to meet the time test, it does not have a history of agricultural value, requiring the owner to establish a five-year agricultural history to qualify for the valuation.

Ineligibility

Land located within city boundaries must meet specific criteria to qualify, such as either a lack of general city services comparable to other areas or continuous devotion to agricultural use for the preceding five (5) years. Land for which the 1-d-1 appraisal has been waived is also ineligible for agricultural valuation.

Application

To receive agricultural valuation, property owners must file a valid application form with the chief appraiser in the location where the land is situated. It is the owner’s responsibility to submit a timely application when property ownership changes to maintain the agricultural valuation. The chief appraiser is not obligated to send applications to new owners.

Filing Deadline

Applications must be filed before May 1. For exceptional circumstances, the chief appraiser may extend the deadline by up to 60 days, provided the property owner requests an extension beforehand. Late applications are subject to a penalty equal to 10% of the difference between the tax imposed at market value and the tax imposed at the agricultural productivity value. The penalty does not apply if the chief appraiser has granted an extension.

Rollback Procedures

If the use of 1-d-1 property changes to a non-agricultural purpose, a rollback tax will be imposed. The rollback tax applies to the portion of land that undergoes a change in use. The chief appraiser issues a written notice of the change, and the property owner has 30 days to file a protest. If no protest is filed or the Appraisal Review Board determines a change of use occurred, a tax bill including the amount due will be issued. Rollback taxes become due on the date of the tax bill and become delinquent on February 1, 20 days after the bill is mailed. Questions regarding tax bills should be directed to the Williamson County Tax Office.

Rollback taxes may still be imposed on properties bought by exempt organizations despite their exemption from ordinary property taxes. While the lien against the land remains, the lien cannot be enforced when political subdivisions purchase the land and change its use. However, the lien remains on the land and may be enforced against future buyers.

This article provides a comprehensive overview of the qualifications for the agricultural property tax exemption in Texas. For detailed information and forms, visit the WCAD website or contact their office directly. Please note that the guidelines outlined in this article are subject to revision as the Texas Property Tax Code and accepted agricultural practices evolve.