What Is an Agricultural Exemption?

Melissa Barrett

Agricultural exemptions essentially mean that certain laws that apply to other businesses cannot be applied to food-producing endeavors. In many cases, these exemptions are tax related and serve to encourage agricultural development. In some instances, however, an agricultural exemption can be offered when the application of a specific rule would cause undue hardship to these types of businesses.

Ranchers may receive an agricultural exemption from sales tax on cattle for breeding.
Ranchers may receive an agricultural exemption from sales tax on cattle for breeding.

To encourage new farming facilities, many regions offer to waive property taxes on land that is used predominately for food production. Although the loss of tax income can be significant for larger agricultural regions, surrounding communities often profit from the creation of additional jobs. In addition, food prices in these areas are frequently reduced by a flux of locally grown meat and produce.

Land that is used primarily for food production may be tax-exempt.
Land that is used primarily for food production may be tax-exempt.

Local governments may tender an agricultural exemption on taxes and fees associated with gasoline purchases. Often, these exemptions come either as reimbursements or lower prices on bulk purchases of fuel. To qualify for these programs, proof of exclusive agricultural use of the gasoline is generally required.

In some areas, farmers and ranchers may be offered an agricultural exemption for sales tax on products purchased for their operations. Seeds and seedlings to be grown for food are often nontaxable, as are animals for stock or breeding purposes. Sometimes, animals used in farm operations, such as plow horses or shepherding dogs, may also be exempt from sales tax.

Other items may be granted agricultural exemption from sales tax if it can be shown that they will be used exclusively for agricultural operations. Tools and machinery for planting and harvesting are often included in this classification. Certain construction materials such as fencing and irrigation pumps may also be exempt. The building materials for specific animal housing, such as chicken coops, may be exempt too. In contrast, supplies for sheds and multipurpose constructions are often taxable.

Also common is an agricultural exemption to local labor regulation, particularly during crop planting or harvesting. During these time periods, an employee’s legal maximum hours of work per week may be extended to prevent crop spoilage. In locations that require benefits for full-time employees, that requirement may be waived for part-time farm workers who temporarily work full-time hours.

Generally, any new construction on commercially or residential-zoned properties requires prior approval. In contrast, creation of new structures or modification of existing structures on agricultural land usually does not require building permits. In addition, local ordinances on noise levels and water usage are not generally applied to farms and ranches.

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