An agricultural exemption (technically called agricultural appraisal or ag valuation) allows qualifying land to be taxed based on its productivity value for farming or ranching rather than its market value. This typically results in dramatically lower property taxes for rural landowners.
It's not technically an exemptionâit's a special valuation method. Land that might be worth $500,000 at market value could have a productivity value of just $50,000, reducing taxes by 90% or more.
To qualify, land must be used primarily for agriculture and meet minimum size and income requirements that vary by county.
Agricultural valuation is one of the most powerful property tax tools in Texasâbut it comes with strings attached. If you stop agricultural use or sell to a non-ag buyer, you'll owe rollback taxes (the difference between ag and market value taxes for the past 5 years).
Qualifying requires genuine agricultural activity:
⢠Livestock grazing
⢠Crop production
⢠Timber production
⢠Wildlife management (with approved plan)
If you own rural land, ag valuation could be saving you tens of thousands annually. If you're buying land with existing ag status, understand the rollback implications before changing use.
A rancher owns 50 acres outside Austin. Without ag valuation:
Market value: $1,500,000 ($30,000/acre)
Tax rate: 2.2%
Annual taxes: $33,000
With agricultural valuation:
Productivity value: $75,000 ($1,500/acre based on grazing income potential)
Tax rate: 2.2%
Annual taxes: $1,650
Savings: $31,350 per year
The land is taxed on what it produces as a ranch, not what a developer might pay for it.
Land must be used primarily for agriculture with the intent to produce income. Requirements vary by county but typically include minimum acreage (often 10+ acres) and documented agricultural activity for at least 5 of the past 7 years.
If ag-valued land is converted to non-agricultural use, the owner owes the difference between ag and market value taxes for the previous 5 years, plus interest. This can be a significant amount on valuable land.
Possibly. While large acreage is typical, some operations like beekeeping or intensive agriculture may qualify smaller parcels. Wildlife management requires at least 10+ contiguous acres with a management plan.