Legislation redefining agricultural land heads to Gov. Noem's desk after Senate approval
Legislation that would change the definition of agricultural land for tax purposes will head to Gov. Kristi Noem’s desk for signing, but not without reservations from some senators.
House Bill 1085 changes the tax code so that land could be classified as agricultural — and receive any ensuing tax breaks — if its “principal use” is agricultural. Additionally, in three of the past five years, the landowner must have received an annual gross income of at least $2,500 from the “pursuit of agriculture.”
Under current statute, land is agricultural if the gross income derived from agriculture is “at least 10% of the taxable valuation of the bare land assessed as agricultural property.”
The legislation passed with 28 senators in favor and seven opposed.
House Bill 1085 will “make sure that agricultural land really is classified as agricultural land for tax purposes,” Sen. Mary Duvall, R-Pierre, said Monday on the Senate floor. “It seeks to simplify for both tax payers and for directors of equalization.”
However, simplicity in tax code doesn’t come easy. House Bill 1085 has undergone amendments in both House and Senate taxation committees, failed to pass during its first stint on the House floor, faced a subsequent vote to reconsider and received ultimate passage in the House after a last-minute House floor amendment.
Additionally, Sen. David Johnson, R-Rapid City, noted that some tree farms would be left out of the agricultural definition with this bill.
“There is no voice out here for forested lands,” Johnson said. “We need a better, more comprehensive and unfettered statewide review of ag classification.”
Harvest on private tree farms “occurs about once every 20 to 25 years,” which would make it difficult for some particularly small tree farms to meet an income requirement of $2,500 in three of the past five years, according to Bill Coburn, chairperson of the South Dakota Family Forest Association.
While farms that don’t meet the income requirement can still be classified as agricultural if they meet minimum acre requirements set by individual counties, some farmers that testified on Feb. 24 during the Senate Taxation Committee meeting noted that their land parcels would be too small to meet those county requirements.
House Bill 1085’s last stop will be Noem’s office for final approval.