House Bill 26-033

This act establishes a separate property tax classification for qualifying agricultural property and provides targeted tax relief for family farms, ranches, and other agricultural operations. Agricultural property must be primarily used for the commercial production of crops, livestock, or other agricultural products. A qualified agricultural owner must own and operate the property and derive at least 20 percent of gross revenue from agricultural production or agricultural water-right leases associated with the property. Publicly traded corporations and entities controlled by nonresident aliens or foreign principals are excluded from qualifying for the benefits.

This act freezes the assessment rate for agricultural property owned by family operations at 5 percent of actual value and requires agricultural land to be valued according to its productive agricultural use rather than its highest potential market value. Qualified agricultural owners may also claim a homestead exemption for their primary residence located on the agricultural property. The exemption either excludes the first $65,000 of assessed value or reduces the residence's taxable value by 35 percent, whichever provides the greater benefit. The exemption is limited to one primary agricultural residence and does not apply to secondary residences, rental properties, or non-agricultural structures.

This act generally requires qualifying property to contain at least 80 contiguous acres, although orchards, vineyards, greenhouses, apiaries, and other specialty or intensive agricultural operations may qualify with as little as five acres. The property must have been actively used for agriculture for at least three consecutive years and generate at least $500 in annual gross agricultural income. Owners must submit federal Schedule F tax forms annually and apply for the classification and exemption by April 15 each year. County assessors may audit or inspect properties to verify eligibility, while owners affected by a declared drought or natural disaster may receive a hardship waiver allowing them to retain their agricultural classification despite temporarily failing to satisfy income requirements.

This act imposes substantial penalties when agricultural property receiving these benefits is converted to another use. Corporate conversion to commercial or industrial use triggers immediate assessment at three times the property's highest market value, while property converted to non-agricultural use within 20 years is subject to repayment of all property taxes previously saved plus a land-conversion surcharge equal to 25 percent of the sale price. The Department of Revenue, in consultation with the Department of Agriculture, is authorized to administer the program and adopt implementing rules. This act was approved May 29, 2026, and is scheduled to take effect August 18, 2026.