On March 6, 2024, State Representative Kendell Culp (R-16th District) addressed the Shelby County Ag Promotion banquet held at Horseshoe Racing & Casino in Shelbyville, Indiana.
His focus: reducing the property tax burden on farmland owners by changing how county assessors calculate farmland values.
“Agriculture’s assessed value has risen by 63% over the past three years. No other sector has experienced such a sharp increase,” Culp explained.
In response, he has introduced House Bill 1192, which seeks to reform the assessment process.
The current assessment method relies on a Purdue University formula incorporating factors such as commodity prices, cash rents, input expenses, and an 8% interest or capitalization rate.
Culp’s bill proposes increasing the capitalization rate to 10%, significantly affecting the final assessed valuation.
“The formula averages input costs, cash rents, and grain prices over a six-year period, dividing the result by the capitalization rate. A higher rate reduces the assessed valuation, easing the tax burden on farmers,” Culp clarified.
Additionally, Culp’s bill introduces another adjustment to smooth out fluctuations in assessments.
Under the current system, the highest year is dropped from the six-year average. Culp suggests dropping the two highest years instead, averaging the four remaining lowest years.
“This change would better reflect the current financial conditions of agriculture by minimizing peaks and valleys in assessments,” he stated.
A fiscal study by the state legislature estimates that the bill, if enacted, could save Indiana farmland owners $33.2 million annually by 2027.
When questioned about the potential revenue shortfall for counties and local governments, Culp acknowledged the concern.
“While it’s essential to provide revenue for local governments and schools, the system must be fair. The burden of these increases cannot fall solely on agriculture,” he emphasized.
Culp’s proposal is part of a broader push by Indiana lawmakers to address property tax reform in 2025, aiming to create a more balanced tax system that supports all sectors equitably.
On March 6, 2024, State Representative Kendell Culp (R-16th District) addressed the Shelby County Ag Promotion banquet held at Horseshoe Racing & Casino in Shelbyville, Indiana. His focus: reducing the property tax burden on farmland owners by changing how county assessors calculate farmland values.
“Agriculture’s assessed value has risen by 63% over the past three years. No other sector has experienced such a sharp increase,” Culp explained.
In response, he has introduced House Bill 1192, which seeks to reform the assessment process.
The current assessment method relies on a Purdue University formula incorporating factors such as commodity prices, cash rents, input expenses, and an 8% interest or capitalization rate. Culp’s bill proposes increasing the capitalization rate to 10%, significantly affecting the final assessed valuation.
“The formula averages input costs, cash rents, and grain prices over a six-year period, dividing the result by the capitalization rate. A higher rate reduces the assessed valuation, easing the tax burden on farmers,” Culp clarified.
Additionally, Culp’s bill introduces another adjustment to smooth out fluctuations in assessments.
Under the current system, the highest year is dropped from the six-year average. Culp suggests dropping the two highest years instead, averaging the four remaining lowest years.
“This change would better reflect the current financial conditions of agriculture by minimizing peaks and valleys in assessments,” he stated.
A fiscal study by the state legislature estimates that the bill, if enacted, could save Indiana farmland owners $33.2 million annually by 2027.
When questioned about the potential revenue shortfall for counties and local governments, Culp acknowledged the concern.
“While it’s essential to provide revenue for local governments and schools, the system must be fair. The burden of these increases cannot fall solely on agriculture,” he emphasized.
Culp’s proposal is part of a broader push by Indiana lawmakers to address property tax reform in 2025, aiming to create a more balanced tax system that supports all sectors equitably.
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