Farmland And Tax Revaluation

By Bryant Spivey
Johnston County Extension Director

On January 2, 2025, like many of you, I received my new Johnston County tax value in the mail. You may or may not know that counties in NC are required by law to evaluate property values at a minimum of every eight years. This revaluation is coming just six years after the last revaluation. This is required such that each property owner is paying their fair share of important community services such as public schools, law enforcement, emergency management, public health, libraries and many more services that our local government provides.

Now, it is certainly true for me, and perhaps for you, that we do not like to pay taxes. I have had the opportunity to reflect on this a great deal over the years. A personal friend and wiser gentleman, whom I deeply respect, once said to me, “I have traveled to many countries and been to places with no taxes, I don’t want to live there!” I have reflected on that many times and I thankful that we live in a great country, state, and county.

The Johnston County Tax Administration will be doing much more work to provide information on property values and offer opportunities for property owners to be heard regarding concerns about individual property values. This information will be forthcoming. For the remainder of this piece, I will be speaking primarily to those that own larger parcels of land in Johnston County that is currently in farm or forest production.

The tax office is required to communicate the full value of all parcels in the county and this includes the value of farmland. However, there is a program in North Carolina called Present-Use Value that is very important to rural landowners especially those in growing counties where real land values are increasing, like Johnston County. This law is authorized in the NC statutes: G.S. 105-277.2 through G.S. 105-277.7. Often folks will call this “ag-use” but the more correct name of the overall program is Present-Use Value (PUV).

There are three types of land that may qualify for PUV.

Agricultural Land – is land that is actively engaged in commercial production of crops, plants, or animals. This includes crops like soybeans, grains, tobacco, cotton, peanuts, corn, horses and cattle. The important thing about all of these enterprises is the word commercial. These items must be produced and sold as the program is based upon production. It is not possible to just plant grass, buy a few animals, and then let them graze. You must produce animals and sell them and you will need documentation that establishes these sales. It is also important that for qualification there must be at least 10 acres of cropland or pasture. Your house, barn, swimming pool or other is not included.

Horticultural Land – is land that is actively engaged in commercial production of fruits, vegetables, nursery products, or floral products. Examples of horticultural products includes peaches, strawberries, pecans, sod, shrubs, greenhouse plants, and Christmas trees. For this category there must be 5 acres involved in production.

Forestland – is land that is actively engaged in the commercial production of trees for harvest. This cannot be simplly a natural area, wildlife plots, or for natural beauty. There must be a sound forest management plan that includes harvest of timber or other wood products at an appropriate time. To qualify for PUV under forestland requires a minimum of 20 acres in production.

To qualify for PUV there must be one tract of land that meets the acreage and production requirement individually. Additional smaller parcels can be included with a larger qualifying tract if the ownership is exactly the same and the use is the same. To qualify as agricultural or horticultural there must be minimum gross income of at least $1,000 on average over the previous three years. Forestland does not produce annual income and does not have that requirement.

So, the next question that you may ask is how does this help reduce my tax burden? On parcels enrolled in the PUV program, tax is paid based upon a schedule of values set forth by the 2025 Use-Value Manual. Enrolled landowners will pay taxes based on the following values:

Cropland $900/Acre
Forestland $300/Acre
Horticultural Land $1150/Acre
Wasteland $40/Acre

This schedule of values represents almost no change from the last tax valuation. This means enrolled landowners could conceivably pay even less tax on their land.

An Example
I selected a parcel from an area that I presume to be one of the highest value areas in the county. The parcel is near Clayton, NC and very accessible to major highways. This piece of land includes both cropland and forestland and most of the land is useable. In addition there is a home and some other buildings. The total 2025 value of the parcel is approximately $3.4 million. However, the present use value is only $314,850. This represents a difference of or “deferred value” of approximately $3.08 million. That is $3.08 million in value for which the owner is not required to pay property tax. At the current tax rate of $0.67 this represents a savings of $20,670.51 of property tax each year. Instead, the owner pays the tax on the value of $314,850 the value of the home and other structures and the land they occupy and a
minimal value on the forest and crop land as mentioned above.

From the example, I think you can see that the Present-Use Value program is likely the most substantial and important farmland preservation tool in North Carolina.

Other Management Considerations
So, if you are a rural landowner and you would like to remain as such, seek to manage your property in a manner that it can qualify and remain enrolled in PUV. To achieve this you must keep it in production. You also have to manage it in a manner that it is not cut into smaller pieces through the generations such that it no longer qualifies. If you do not have a good estate plan, you need one. Do not let the courts divide your assets but plan and set forth how this should be done. Be careful about selling small parcels that reduce your acreage on tracts that minimally qualify.

Production Is Key
This is key…you are not required to do the commercial production! There are farmers in Johnston County that are willing to do that production for you and they will even pay you an annual lease for that privilege. Farmers will come to your property, plant their crops, manage their crops, and steward your land. Also, you should not assume that because the taxes on your property increased, that the farmer owes you more money. Farmland rental rates are established by supply and demand and the quality and accessibility of your land. If your land is in the center of a highly populated area where travel with farm equipment is difficult it is NOT going to command as much farm lease as a parcel in a rural community. However, the tax discount that you receive if you want to keep your land could necessitate that you befriend a farmer and implore him or her to tend your land.

If we can offer information about management of farmland or forestland in Johnston County, please feel free to reach out to one of the Extension Agents at the Johnston County Extension Center. For more help with qualification for PUV, the staff at the Johnston County Tax Office can help landowners file applications and qualify for the program.