Agricultural Land Taxable Values Down . . .

Economic Tidbits 12.18.17

The taxable value on agricultural land declined 2.77 percent in 2018 according to the Nebraska Department of Revenue.  Taxable value for all real property increased 0.96 percent, with residential and recreational property value growing 3.66 percent, and commercial and industrial property growing 6.94 percent. The decline in agricultural land values marks the second consecutive year taxable values have shrunk.  Prior to last year, the taxable value on agricultural land had not declined since at least 1993, and perhaps as far back as the late 1980s.  It may seem like a distant memory, but just three years ago, the taxable value of agricultural land statewide increased almost 20 percent.  Since then, market values for land have declined between 15-20 percent and these declines are now being reflected in taxable values.  Expect taxable values to continue to decline over the next few years due to the lag effect in how taxable values are set.  Values are set using data on sales prices from the three years prior to the tax year for which the taxable values are being set.

ag land tax values
The adjustments in taxable values varied across the state (see map).  In Hitchcock County, the value of agricultural land fell over 10 percent while in Sheridan County it increased 4.48 percent, a difference of almost 15 percentage points.  Other counties with drops of greater than 9 percent were Deuel, Red Willow, Hayes, and Washington Counties.  In all, 74 counties saw decreases in agricultural land values, and 19 counties saw either no change or increases in values.  Counties in southwest and south central parts of the state saw greater declines.  Values in north central Nebraska were either mostly stable, or up slightly.

What do the changes in taxable value mean for property taxes levied on agricultural land?  The ultimate answer depends on local government spending decisions and state aid to schools.  History as shown overall property taxes levied will grow.  In some counties, the values changes might result in a slight shift in taxes levied from agricultural land to other property sectors.  For other counties, the trend of agricultural land carrying a greater share of the local tax burden will continue.

 

Jay RempeJay Rempe is the senior economist for Nebraska Farm Bureau. Rempe’s background in agricultural economics, years of experience in advocating at the state capitol, and a firm grasp of issues allow him to quantify the fiscal impact of a regulatory proposal, and provide an in-depth examination of key issues affecting Nebraska’s farmers and ranchers.

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