We classify agricultural land based on ownership, size, and use (15-7-202, MCA).
A parcel of land is classified as agricultural land if it is 160 acres or greater.
To be classified as agricultural land, parcels under 160 acres must meet the following basic criteria:
- One ownership;
- Agricultural production of:
- food, feed, and fiber commodities;
- livestock, poultry, bees, and biological control insects;
- fruits and vegetables;
- ornamental, nursery, or horticultural crops that are raised, grown, or produced for commercial purposes; and
- domestic animals and wildlife raised in domestication or a captive environment.
- The land must produce $1,500 annual gross income or the grazing equivalent if the land is used to raise livestock or domestic wildlife. The land must be capable of sustaining 31 animal unit months (aum) annually. (15-7-202, MCA, ARM 42.20.604, 40.20.620, 42.20.681 and 42.20.683)
Agricultural Land Classification
To qualify as agricultural land for the current tax year, submit an Agricultural Land Classification Application (Form AB-3) to your local field office by March 1.
Provisional Agricultural Land Classification
Property owners of a fruit orchard, vineyard, or Christmas tree farm, may apply for provisional agricultural land classification for five years to allow their agricultural product to reach salable maturity. (15-7-202, MCA)
To qualify for provisional agricultural land classification for the current tax year, fill out the provisional agricultural land classification section within the Agricultural Land Classification Application (Form AB-3) and submit the completed form to your local field office by March 1.
Types of Agricultural Land
Agricultural land has five subclasses to determine the productive value for property tax purposes.
|Grazing Land||Land used for grazing livestock and includes irrigated grazing land||Animal unit months per acre (aum/ac)||Private Grazing Fee|
|Tillable Irrigated Land||Land that is irrigated the majority of the time||Tons of alfalfa hay per acre||Alfalfa Hay|
|Non-Irrigated Continuously Cropped Hay Land||Land used to produce hay the majority of years||Tons of hay per acre||Alfalfa Hay|
|Non-Irrigated Summer Fallow Farm Land||Land used for dry land farming||Bushels of spring wheat per acre||Spring Wheat|
|Non-Irrigated Continuously Cropped Farm Land||Land used to grow crops three out of four years. This must be an accepted practice for the area. It’s mostly found in northwestern Montana||Bushels of spring wheat per acre||Spring Wheat|
Agricultural Land Value
We value agricultural land by dividing the net income per acre by the capitalization rate. (15-7-201, MCA)
- Net Income Per Acre
- We determine net income using:
- the 10-year Olympic average of the appropriate commodity price,
- a crop share or livestock expense factor, and
- for irrigated land, the cost of delivering water from its source to the crop.
- We gather production data from the Natural Resources Conservation Services (NRCS) and commodity price data from Montana Agricultural Statistics. (ARM 42.20.681)
- Other sources of publicly available information may be used if suggested by the Agricultural Land Advisory Committee and the department adopts it by rule. (15-7-201, MCA)
- Capitalization Rate
- The capitalization rate is set by statute. (15-7-201, MCA)
- The current rate is 6.4%
For more information on agricultural land valuation, refer to:
Non-qualified Agricultural Land
Non-qualified agricultural land is:
- Parcels of land, 20 acres or more, but less than 160 acres, that have not met the requirements for agricultural land classification listed above.
- Valued at the statewide average productivity value of grazing land.
- Taxed at seven times the agricultural land tax rate.
Nonproductive Patented Mining Claims
Nonproductive patented mining claims are land purchased from the federal government for the sole purpose of a mining operation and are:
- Incapable of supporting plants or animals in commercially salable quantities,
- Not used for recreational, residential, commercial, industrial, forest, or agricultural use
Nonproductive patented mining claim land is valued as agricultural grazing land. (ARM 42.20.681)
Applying for a Mining Claim Classification
Paying Agricultural Land Property Tax
The elected county treasurer in each county bills and collects agricultural land property tax.