The United States offers various agricultural tax exemptions, including to those in the business of raising crops, timber, livestock, dairy, poultry, fish and fur-bearing animals. The farm tax exemptions that some states allow give farmers a break on agricultural property taxes, sales taxes on farm equipment, fuel tax and sales taxes on chemicals, pharmaceuticals and farming supplies.
Agricultural Property Taxes
All 50 states give agricultural land favorable tax treatment. State and local assessors tax most property based on its fair market value. Agricultural land is an exception. A large consideration for a farm's market value is its ability to produce products. Connecticut gives farmland a 15 percent tax exemption. New York allows new buildings and structures on farms a complete tax exemption for 10 years. Some states also allow residential homestead farm tax exemptions.
State and local sales taxes vary throughout the country. Typical taxes run between 6 and 10 cents on the dollar. Agricultural tax exemptions include the sales and use tax for farming equipment in many states. This includes high-dollar items like tractors, aircraft, harvest equipment and irrigation systems. These states commonly allow repairs and parts for the machines as well. Some states include small items like baling wire and tools for maintenance and repairs.
The federal government adds surcharges of more than 18 cents per gallon on gasoline and more than 24 cents per gallon on diesel. Most states impose additional surcharges that commonly amount to more than 20 cents per gallon on both fuel types. Several states make farmers exempt from fuel taxes for the types of fuel commonly used on farms, including diesel, gasoline and liquefied petroleum. California, Texas and Kentucky are among the states that grant fuel tax exemptions to farmers.
Farmers use several chemicals in the course of preparing fields, spraying crops and treating animals. The states that allow exemptions on the sales and use taxes for farming chemicals commonly include fertilizers, pesticides and pharmaceuticals for livestock and working farm animals. Many also include seeds for planting crops and feed for animals. Living genetic materials and poultry and livestock purchases for reproductive purposes are also among the agricultural tax exemptions in many states.
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