Loss of farmland, rising property taxes, among topics covered at Rural Caucus 

By Dave Blower Jr. 

Several Indiana state legislators participated in the Rural Caucus on Aug. 14 in the Normandy Barn at the Indiana State Fairgrounds. Co-chaired by State Sen. Jean Leising (R-Oldenburg) the caucus allows state senators and representatives to meet with stakeholders to discuss key issues impacting Indiana’s rural communities, including farmland loss, education, property taxes, agriculture policy, energy sustainability and local economic development. 

“As chair of the Senate Committee on Agriculture, I look forward to using the insights of the expert speakers on the issues when considering policy that will help our rural areas grow,” Sen. Leising said. “Our agricultural industry is one of the strongest in the country, and events like these bringing together legislators, farmers and other stakeholders ensures we can create good policy that benefits all Indiana residents.” 

Among the many speakers was Don Lamb, director of the Indiana State Department of Agriculture (ISDA), who discussed the value of agriculture on the state’s economy. Lamb said Indiana agriculture industry contributes $35.1 billion to the state’s economy. 

The Hoosier State is the ninth largest farming state in America. Indiana has 53,599 farms, and 94 percent of those are family-owned and operated. The average size of these farms is 272 acres. In total, there are more than 94,000 farmers in the state. 

However, despite this success, a recent ISDA study shows that Indiana is losing farmland. 

Inventory of Lost Farmland 

The ISDA study, the Inventory of Lost Farmland, found that there was a reduction of Indiana farmland of between 1.5-2 percent from 2010-2022. ISDA used two sources of data to write the report. The first was parcel data from the Department of Local Government Finance, and the second was crop layer data from the USDA’s National Agricultural Statistics Service. 

According to the ISDA’s report, total agricultural acreage loss was approximately 3.5 percent in that time period. However, the state gained 1.7 percent in acreage that was converted to agriculture. The report said most of the lost acreage was around the edges of cities and suburban areas. 

The report caught the attention of state lawmakers in attendance, such as State Sen. Brian Buchanan (R-Lebanon). He said it is likely that the General Assembly will discuss options in early 2025. 

“We heard from the department of ag and Don Lamb talking about land use and the report of how much land we’ve lost in Indiana over the last several years,” he said. “That’s always a discussion.” 

Lamb and ISDA recommends that the legislature pass a bill directing ISDA to update the Inventory of Lost Farmland every five years, starting in 2029 for a report to be published in 2030. “We believe getting on this five-year schedule will be most beneficial as data from the Census of Agriculture will be released again in 2029,” Lamb said. 

ISDA recommended that state government involve local units of government in farmland preservation planning. Lamb said Indiana is a “home rule” state, and most land-use decisions are made locally. He said local units of government should be empowered to identify land-use trends when making decisions. 

Lamb added that Indiana has approximately 12.56 million acres designated as prime cropland, pastureland or forestland. ISDA recommends that government units consider the total number of prime farmland acres and where it is located before making land-use decisions. 

Finally, Lamb said the General Assembly should consider investing in technology and innovation that allow farmers to produce more with less acres. He said, at some point, government will need to consider a loss of farmland acres as a food security issue. 

Property taxes on farmland 

Rural Caucus attendees spoke at length about the rising cost of all property taxes – especially on Indiana farmland. According to a presentation by Indiana Farm Bureau, all real property owners saw unusually high increases in tax bills in 2023. The increases in 2024 were less, but still much higher than usual. 

Large increase in home values caused major spikes in homestead taxes in 2023. Higher supplemental deductions reduced homestead tax increases in 2024. 

Buchanan said property taxes remain a big issue for Hoosiers. “We’ve had some tremendous spikes in property tax bills, which was caused by the tremendous inflation,” he said. “There’s a lot of ideas to provide some relief for Indiana property taxpayers.” 

For farmers, the farmland base rate increased by 16 percent in 2023 and 27 percent in 2024. The overall tax rate dropped in 2023, which reduced the farmland tax increase to 10.5 percent. Rates were also unchanged on average in 2024, so farmland taxes increased with the base rate by 26.5 percent. Experts estimate that the farmland base rate will spike again in 2025 by another 20 percent. 

Some of this is due to the rising value of farmland in 2022 and 2023. During this time, farmland value topped $10,000 per acre for the first time. Higher corn and soybean prices in 2022 and 2023 increased the profitability of growing these crops and also increased the demand for farmland. 

Indiana does not base farmland assessments on the selling prices of land. But some of the same factors that influence the selling price – such as commodity prices, yields, costs, interest rates and rents – are included in the base rate formula. 

Tax deductions are also skewed. Homeowners get the biggest tax breaks from deductions and Local Income Tax (LIT) credits. The standard and supplemental deductions are large and LIT credits always include the homestead property. 

Tax abatements provide deductions for business real and personal property. Business property is located in urban areas with higher district tax rates, which results in more deductions. 

Farmland gets the smallest breaks from all the deductions and credits. Farmland’s tax break comes from the use value assessment, through the calculation of the base rate. 

Because of an estimated farmland base rate of 20 percent in 2025 and an overall gross assessed value of 6 percent, lawmakers said they are sensitive to farmers’ plight. Many of the state legislators at the Rural Caucus anticipate a property tax bill to be among the most-discussed issues during the 2025 Indiana General Assembly.