Taxable Value of Agriculture Land is Higher

The taxable value of agricultural land in Nebraska rose 6.3 percent in 2023 compared to last year according to the Nebraska Department of Revenue (Figure 2). Residential property, excluding new growth, rose 14.3 percent. Commercial property, also excluding new growth, saw a 9.6 percent increase. This marks the third consecutive year taxable value for agricultural land has risen. Since 1993, growth in the taxable value of land has averaged 6.3 percent and declined in only four years, 2017-2020. 

FIGURE 2. ANNUAL PERCENTAGE CHANGE IN TAXABLE VALUE OF AG LAND

Source: Nebraska Department of Revenue

Figure 3 charts changes in taxable value of agricultural land by county. Perkins County saw the greatest gain this year compared to last, increasing 24 percent. Values in Dixon, Grant, Harlan, and Hooker Counties also rose by more than 15 percent. On the other hand, five counties saw reduced taxable values. Brown County netted the largest decline of 7.5 percent. A handful of counties saw only negligible increases in values. 

FIGURE 3. PERCENTAGE CHANGE IN TAXABLE VALUE OF AG LAND, 2023 vs. 2022

Source: Nebraska Department of Revenue

The increases in value are not surprising. Under the sales comparison approach used to set taxable values, land transactions from the previous three years are considered. This year’s values were based on land sales occurring between October 1, 2019, and September 30, 2022. Figures from the USDA Economic Research Service indicate the average per acre value of land in Nebraska declined -2 percent in 2020, but rose 11 and 21 percent in 2021 and 2022, respectively. Thus, the impetus for this year’s value increase. And 2024 will bring more of the same. The annual farm real estate report written by the UNL Department of Agricultural Economics indicated land values were up 14 percent this year. This increase will factor into next year’s taxable values.

Increases in taxable value typically result in higher taxes. Historically, there is a strong correlation between changes in taxable values and property taxes. However, history may be proven wrong moving forward. The Nebraska Legislature has created income tax credits for property taxes paid to K-12 schools and community colleges and has dedicated hundreds of millions of dollars each year to the credits. In addition, funding for the property tax credit program, which directly reduces property taxes levied, has increased. Hopefully, these programs will blunt the impact of higher values.