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Soil Productivity Index / Property Taxes

Soil Productivity Factors

To avert a statewide increase in farmland taxes (an estimated $57.4 million annually), Indiana Farm Bureau supported legislation in 2012 and 2013 that delayed implementation of a change to the soil productivity factors used to determine farmland assessments.

The 2013 legislation required a study by the Department of Local Government Finance and the Purdue School of Agriculture to determine if new soil productivity factors are needed, what model should be used to calculate new factors and what exactly the factors should be to reflect the productive differences in the nearly 7,000 soil types identified across Indiana.

The DLGF presented new factors to the Commission on State Tax & Financing on Nov. 13. Its report included factors ranging from 0.5 to 1.31, compared to the previous range of 0.5 to 1.28.

Session goals:

  • Change name to “soil productivity rankings” that are provided to the DLGF from Purdue School of Agriculture after appropriate modeling techniques have been conducted.
  • Require use of detailed soil maps and detailed soil data from NRCS.
  • Require that soil productivity rankings are developed by dividing model yield by average yield.
  • Maintain 0.5 minimum soil productivity ranking that recognizes all soil that can be farmed for crops has value. If not farmed for crops, the 0.5 factor should be combined with appropriate influence factors.

Farmland Assessment

In the last few years and due to the most recent reassessment in particular, farmland assessments for farmers across Indiana have been changed to another property classification for property tax purposes. Changes have also happened within the farmland classification, such as moving woodland to non-tillable land.

All reclassifications have resulted in the increased taxable value of parcels that were previously and appropriately identified as agricultural. Almost all these changes were done without taxpayer notice of the change in assessing techniques.

Session goals:

  • Maintain use value assessment for all agricultural land.
  • Calculate farmland assessments using a base rate, soil productivity rankings, and influence factors.
  • Use most current data available in the base farmland calculation that reflects more accurately the income potential of farmland as commodity prices and annual production fluctuate more dramatically and more frequently.
  • Require a specific taxpayer notice when farmland assessments are changed to another farmland category or to another assessment method such as excess residential, commercial or industrial.

For the latest information on soil productivity index/property taxes issue, contact
Katrina Hall, Director State Government Relations
Tel: 317-692-7805 | KHall@infarmbureau.org  

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