Whether you already have farm animals or are dreaming of it (and you live in Texas), you may have heard of Ag exemption and wondered whether you can take advantage of it.
Chickens often qualify for Texas Ag exemption. It isn’t as easy as picking up a few chickens and sticking them in your backyard, though. You must qualify as a farmer.
In this guide, we break down the specifics of the Texas Ag exemption and how chickens fit into it. We’ll also cover some common questions people have about this topic.
What Is an Ag Exemption?
Ag exemptions are sometimes called “farm credits” because they (usually) save on taxes by using your existing agricultural value. The Texas Ag exemption is a type of property valuation where a farmer’s land is appraised based on the capacity of the land to produce goods in agriculture.
Due to the difference between land value and production value, farms usually notice decent tax savings by applying for the exemption. The essential part of the exemption is that an authorized appraiser needs to come and evaluate the land.
What Are the Qualifications for Texas Ag Exemption?
Texas exemption guidelines allow these activities to qualify:
- Farming or ranching (only if the purpose is for sale)
- Production of fiber crops, such as cotton or hemp (only if the production purpose is for sale)
- Timber production
- Feedlot operation
- Commercial fish farm operation
- Beekeeping
- Crop dusting
- Custom harvesting
- Growing plants in a commercial nursery for sale
- Veterinary businesses that make farm or ranch calls
- Future Farmers of America (FFA) or 4-H club
- Agricultural vocational courses (teachers only)
Each of these activities has its qualifications, but if you engage in any of the above professionally, you may qualify for the Texas Ag exemption. You can consult this handout to learn more about qualifying.
Do Chickens Qualify for Texas Ag Exemption?
If you are hoping to pick up a few egg-laying chickens and keep them in your backyard, you may face disappointment in learning that the exemption does not cover that situation. Many animals are covered by the exemption, but there are specific guidelines for these animals to qualify.
You must first qualify for the Texas Ag exemption as a farmer. These qualifications are:
- Having agricultural land of ten acres or more (depending on residing county)
- The property was used for agricultural purposes for a minimum of five to seven years
- It has a single animal unit for every five to ten improved pasture land acres OR a single animal unit for every 15 to 25 acres of native land
What does animal unit mean? It’s defined by the Texas code as:
- A 500-pound calf is equal to a single animal unit
- One cow and one calf are equal to a single animal unit
- One bull is equal to 1.5 animal units
- One horse is equal to a single animal unit
- One sheep or a goat is equal to a single animal unit
- One miniature horse or a donkey is equal to a single animal unit
Chickens are excluded from the Texas code’s definition of what constitutes an animal unit. There has been no clear answer to how many chickens are equal to a single animal unit.
The Texas code does include qualifications surrounding chicken use:
- Chickens are raised for sale
- The farmer or rancher must possess an authentic agricultural registration number
In closing, chickens qualify for an exemption, though the specifics are covered by the authorized appraiser and your selected tax professional.
Texas Chickens and Exemption FAQ
Here are some frequently asked questions regarding chickens and the Texas Ag exemption.
How much savings does the Texas Ag exemption provide?
Depending on your current tax rate, the exemption rate can save as much as 50%. Whether you are eligible for the exemption and the tax savings you may have access to depends on the county in which you reside.
The best way to learn how much the exemption could save you is to consult a tax professional, one well-versed in the Texas agricultural production tax codes.
Is a barn or coop Ag exempt in Texas?
Under the Texas Sales and Use Tax Code, barns and coops are not exempt from tax. The code states that general-purpose buildings (such as livestock barns, offices, kennels, machine shops, bunkhouses, and hay barns) are not exempt. Barns and coops fall under “livestock barns”.
Is chicken feed tax-exempt in Texas?
Chicken feed and other animal feed (such as hay, corn, and oats) meant for work animals or animals raised for consumption are exempt from sales tax. This exemption means that chicken feed will not have sales tax applied when paying.
This exemption is in the Texas Administrative Code in the section that outlines the State and Local Sales and Uses Taxes.
Is Ag exemption a type of wildlife exemption in Texas?
Exemption for the AG and the wildlife exemption are two separate exemptions in Texas. Ag exemption is for animals used and raised in an agricultural environment and sold for a profit. In order to qualify for a wildlife exemption in Texas, you must first already have acquired an Ag exemption.
To qualify for the wildlife exemption, the farmer or rancher must have a targeted species that they will make and execute a wildlife management plan. In Texas, the species used in the wildlife exemption are often:
- White-tailed deer
- Owls
- Bats
- Songbirds
- Butterflies
Chickens in Texas
Chickens do qualify for the Texas Ag exemption, but there are some important guidelines that must be met in order to qualify.
If you are a large-scale farmer who raises and sells chickens (or their eggs) for profit, you should research Ag exemption and find out whether you qualify. If you were hoping to get a tax break from backyard farming, this is not the route for you.
It is worth looking into the exemption if you believe you may qualify, as savings are often as high as 50%, depending on your situation.
References:
- https://comptroller.texas.gov/taxes/ag-timber/
- https://dallas-tx.tamu.edu/files/2018/07/Tx-Ag-Exemption-handout.pdf
- https://comptroller.texas.gov/taxes/property-tax/ag-timber/index.php
- https://texreg.sos.state.tx.us/public/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=34&pt=1&ch=3&rl=296
