More Ups Than Downs

Taxes levied on agricultural land in 2021 equaled $1.146 billion, down slightly (0.33 percent) from taxes levied in 2020. Last year’s ever so slight decline marked the fourth consecutive year taxes on agricultural land were off compared to the previous year. In fact, taxes on agricultural land are down 4.5 percent since hitting a high in 2016 of $1.201 billion. History shows declines in taxes levied are highly unusual. Instead, increases are the norm.

Figure 1 plots annual percentage changes in total taxes levied on agricultural land since 1993. Note that taxes levied do not account for credits provided through the property tax credit program or the income tax credit for property taxes paid to schools. Property taxes levied on agricultural land declined only once prior to 2018, in 1998. The reason—the enactment of maximum levies by the Legislature in 1997. Otherwise, increases in excess of 5 percent were more common, occurring in roughly half the years. In two years, 2013-2014, tax increases exceeded 15 percent. Overall, annual tax changes averaged 4.95 percent over the 29-year period.

Figure 1. Taxes on Agricultural Land, Annual Percentage Changes, 1993-2021

While overall taxes on agricultural land were off slightly last year, declines were not universal across all counties. Figure 2 shows percentage changes in property taxes levied on agricultural land by county between 2020 and 2021. Counties were evenly split between those with tax declines and those with tax increases. Declines were seen in 47 counties last year. Counties with the largest declines included Deuel (-8.56 percent), Douglas (-8.08 percent), and Holt (-6.51 percent). On the other hand, 46 counties saw increases in taxes. Cedar County (+7.66 percent), Grant County (6.96 percent), and Logan County (+4.75 percent) took top prizes for largest increases.

The increases in land prices seen in 2021 and 2022 make it a safe bet the four-year consecutive streak of tax decreases will be broken this year. And, for a side bet, it’s likely that counties experiencing tax increases will far outnumber those with decreases.

Figure 2. Taxes on Agricultural Land, Percentage Changes by County, 2020-21