If you live in Texas or you’re considering starting a new life in Texas, you may have heard of the ag exemption that could save you some coin. This exemption allows you to be placed under a different valuation method and consequently enjoy tax savings.
As is common for tax schemes, you will have to meet certain conditions, like having to own a certain number of acres or a designated number of animal units to qualify for the exemption. The question is: do keeping chickens qualify me for the ag exemption? You may well qualify depending on the number of hens and their use.
Chickens may be eligible for the Ag exemption, provided they can genuinely be considered an integral part of an agricultural business. I.E. you sell eggs or meat for a profit and you have obtained the necessary permits from the relevant authorities.
You will be required to meet some basic requirements which we will discuss below.
In this article, we’ll guide you through what the ag exemption is and how your agricultural land lay qualify. Do note, that this quick overview does not constitute professional advice, and you are advised to contact an accountant, lawyer, or your county clerk.
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What Is the Texas Ag Exemption?
First, let’s first clarify what the Agriculture Exemption is.
The Ag exemption is a property evaluation in which a farmer can have their land appraised based on the land’s capacity to produce agricultural goods. Depending on the market value and type of valuation requested, farmers who qualify will typically see significant tax savings.
Technically, this is not a different tax rate for farmers. Instead, it’s a different way of calculating property values which leads to lower valuations and thus a lower property tax.
However, not everyone may be eligible for the ag exemption. As such, farmers will have to apply for the exemption during a set period in a year and wait for a valuation from the authorities before benefiting from the new valuation.
There are a variety of prior requirements that a farmer must meet before they qualify for the ag exemption. For example, you may have to own a certain amount of land or raise your animals solely for the purpose of sales.
Things to Consider Before Applying for the Texas Ag Exemption
Now that you’re aware of what the ag exemption is, perhaps you’ll be interested in applying. While the process is not overly complicated, there are a few things you should consider before you go on.
What Are the Requirements to Apply for an Ag Exemption in Texas?
If you’re interested in applying for an ag exemption in Texas, here are some of the requirements you’ll need to first meet:
- You must have agricultural land of 10 acres or more.
- One animal unit per 5 to 10 acres of agricultural land. Animal units are subjected to the breakdowns below:
- One cow, calf, or horse = One animal unit
- One bull = One and a half animal units
- Six sheep or goats = One animal unit
- Two miniature horses or donkeys = One animal unit
Chickens may be considered animal units, depending on how they are used:
- You must be a farmer or rancher raising chickens for sale.
- You must have a valid agricultural registration number. This number must be issued by a valid comptroller to certify that you can be exempted from taxes imposed by the county.
If you have registered your business with the Texas Secretary of State, you may also have to provide your SOS file number to qualify for an ag exemption. It’s also worth noting that this list is non-exhaustive and may be subject to change.
Is It worth Applying for the Ag Exemption?
For many small-scale farmers in Texas, applying for an ag exemption may feel like a hassle, as you’ll have to go through various leaps and bounds to qualify. Thus, many farmers may begin to wonder if it’s even worth the hassle.
Your potential tax savings will depend on several factors, including:
- what county you are in
- land values
- the type of agriculture you are engaged in
- number of acres
Generally, if your tax rate is high, you can expect savings at well over 50% as your land is re-evaluated based on farmland purpose.
As such, it may be worth applying for an ag exemption. Of course, the process may seem complicated in the beginning, and you may want to consider engaging professional accountants or to ask your local county clerk to assist you along the way.
How to Apply for the Ag Exemption
Finally, if you believe you meet all the criteria to qualify, then you’ll be ready to submit your application. There are 2 ways you can do this following these tips below.
Applications typically take place between January to April of the year corresponding to your application.
Applying on Paper
A paper application is a slower way to apply. Unfortunately, if you do not have a social security number, then applying on paper is the only way you can receive your ag exemption.
To do this, you’ll have to gather all the necessary paperwork as noted above and mail them to the council office. A set of applications from the Texas Comptroller website must also be attached with your application. A paper application typically takes between 3 to 4 weeks to complete.
Once your application has been approved, the Texas Comptroller will mail you the necessary documents noting that you have met the criteria set by the office and will be ag exempt in the year to come.
As times change, so has the application process for an ag exemption in Texas. If you’re a citizen and have a valid social security number, you’ll be able to apply for your ag exemption through the Texas Comptroller website.
Provided you have all the necessary documentation, the application takes approximately 10 minutes to complete, and you will receive a confirmation along with your documents within 5 to 7 business days.
However, do note that you must first have a valid eSystems or Webfile account with the State of Texas before you can make an online application. For first-time users, making an account through the Texas Comptroller website is mandatory.