The Indiana General Assembly has decided to again make changes to the farmland assessment formula, and Purdue Extension says landowners may notice a few changes.
This is the second time in two years that a change has been made. Larry DeBoer, a professor of Agricultural Economics with Purdue University, says this year’s changes will likely lower the property tax burden for local farmers with an eventual increase expected for everyone else.
The formula is considered complicated and can be found in Senate Enrolled Act 308. The legislation was signed into law by the Governor late last week. According to DeBoer, the assessment formula starts with a base rate, but sees a figure added to it called the capitalization rate. That second figure includes a numerator – consisting of income generated from the farm land; and a denominator made up of average interest rates.
Changes in commodity prices, however, are influencing the capitalization formula from years where those prices were up dramatically. Those same commodities have since fallen. That, according to DeBoer, is the reason behind another change in the capitalization formula.
Under the new formula farmers will see their property tax levy decreased. DeBoer says, however, that means increases on other homeowners for local governments to maintain their current revenue levels.