The base rate value for agricultural land has been set by the Indiana Department of Local Government Finance. The good news is, it’s going down – dropping from $1,960 this year to $1,850 next year.
“We hit our peak and it continues to go down,” said Katrina Hall, Indiana Farm Bureau’s public policy director.
The decrease is a direct result of changes made in the property tax formula by SEA 308, which was passed by the General Assembly in 2016. The bill made a number of important changes in the way property taxes are calculated, including freezing the soil productivity factors at the 2011 levels, establishing statutory cap rates (ranging from 6 percent to 8 percent) that are triggered by how much the farmland formula increases or decreases, and reducing the time lag in the net income data used in the formula.
The use of more current data helps assure that farmland taxes are not so far out of sync with farm income, Hall explained.
Prior to the bill’s passage, farmland taxes had increased by 63 percent from 2008 to 2015. During the same period, farm income declined precipitously – 30 percent in 2014 and 35 percent in 2015.
As the farm economy worsens or stays flat, the other high years will drop out of the formula and lower-revenue years will come on. This will decrease the values even more, Hall said.
Farmers who would like to see how the rate is calculated – or who really enjoy math – can find the calculations on the DLGF’s website.