A $3,500 increase in property taxes on just one tract of land this spring made Tom Chalfant’s eyes pop.
“It’s where we have our fertilizer dike and also our solar installation,” the Redkey, Ind., farmer said. “That’s what got my attention.”
He wasn’t the only one to notice those property tax hikes this year. Those increases were the result of recent legislation changes that remove exemptions for certain farm structures like containment dikes and on-farm solar panels.
A compromise
Pulling those deductions is part of a larger tax reform plan, explained Ryan Hoff, senior director of government affairs at Indiana Farm Bureau.
“Some of these one-off or very specialized deductions are being removed in favor of bigger or broader property tax deductions,” he said. “One of those is for 2% class properties like ag land. As those 2025 tax reform changes phase in over the next five years, the 2% class properties will be getting a one-third deduction of all the value. So, rather than being a deduction specific to fertilizer or chemical dikes or on-farm solar, it is a broader application of a property tax deduction.”
Folks will see those decreases in property taxes over the next few years, Hoff said. But for people like Chalfant that relied on the specific exemptions to make his containment dike and solar panels pencil out on paper, it will be the opposite for the next year or so.
“Some people will benefit from the changes,” Hoff added. “For other people who maybe had a lot of value wrapped up in these deductions that went away, depending on their circumstances, maybe it is helpful and maybe it isn’t. But it is particular to each taxpayer.”
Chalfant doesn’t see it as a compromise.
“The governor was wanting to bring residential property taxes down,” Chalfant said. “This was one of the sacrifices that had to happen.”
For Chalfant, these changes have rendered his solar panels worthless. When his net metering contract with the local energy company is up, he’d be losing money by building battery storage due to the property tax exemption being lifted.
“It wouldn’t be worth it to put any more money into it because I’ll just be building more equipment that I have to pay more taxes on,” he added.
Other changes
Another increase that folks may have noticed is a jump in the assessed value of ag buildings, leading to more property tax spikes. Hoff shared that the team at Indiana Farm Bureau is already working to address these increases.
“One of the issues that we are going to be working with the legislature to try to change is to move ag buildings from the 3% property tax class to the 2% class,” he said. “So the ag buildings would also get that one-third deduction once those reforms are fully phased in.”
Fertilizer and fuel containment dikes could fall into the ag buildings category, meaning that they could also be moved into the 2% class if that change goes through.
“It would be a one-third deduction rather than a full exemption, but it would be something,” Hoff said. “We made this request last session to reinstate the containment dikes deduction, and we didn’t get any traction. We will be revisiting that with legislators. The purpose is to prevent chemical spills, which would impact everyone. So providing that deduction for an improvement of a broader benefit makes sense to us.”
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