Legislature passed a major provision aimed at reducing farm taxes owed for school bond payments. This targeted bond credit for agricultural land is a major win for farmers and school districts struggling to pass building bonds.
Here are the specifics and mechanics of how this credit will work:
Who’s eligible: Eligible property for the credit includes all class 2a, 2b, and 2c property under section 273.13, subdivision 23, other than property consisting of the house, garage, and immediately surrounding one acre of land of an agricultural homestead.
What’s the credit: The credit amount for each qualifying property is equal to 40 percent of the property’s eligible net tax capacity multiplied by the school debt tax rate (as determined under section 275.08, subdivision 1b.). The county auditor shall determine the tax reductions allowed under this section within the county for each taxes payable year and shall certify that amount to the commissioner of revenue. The commissioner shall review the certifications for accuracy and may make changes deemed necessary.
How it’s used: The credit must be used to reduce the school district net tax capacity-based property tax as provided in section 273.1393. The commissioner of revenue shall certify the total of the tax reductions granted under this section for each taxes payable year within each school district to the commissioner of education, who shall pay the reimbursement amounts to each school district as provided in section 273.1392.
When is it effective: An amount sufficient to make the payments required by this law is annually appropriated from the general fund to the commissioner of education. This law is effective beginning with taxes payable in 2017.