Tax
Determining whether a farm purchase is exempt from Ohio sales tax can be confusing and, at times, frustrating. This blog post breaks down Ohio’s agricultural sales tax exemption by explaining what qualifies, what doesn’t, who can claim the exemption, and why the rules often seem unclear.
The Starting Point
In Ohio, the starting point in determining what qualifies for the agricultural sales tax exemption is simple: everything you buy at retail is taxable unless the law says otherwise. Ohio does have a special sales tax exemption for certain purchases connected to farming, but that exemption is limited. Just because something is commonly used on a farm does not automatically mean it qualifies for the agricultural sales tax exemption.
Put another way, Ohio’s agricultural sales tax exemption is narrow and fact specific. You cannot assume something is exempt simply because it is farm related. The question is usually the same: Is the item/property being purchased used primarily to produce an agricultural product that will be sold? If the answer is no, the exemption generally does not apply.
Overview of Ohio’s Agricultural Sales Tax Exemption
Both the Ohio Revised Code (ORC) and the Ohio Administrative Code (OAC) include provisions that exempt certain agricultural purchases from Ohio’s sales tax. The exemption most commonly relied on by farmers is found in R.C. § 5739.02(B)(17) and explained further in OAC 5703-9-23(B) and 5703-9-23(C).
Under those provisions, certain tangible personal property may qualify for Ohio’s agricultural sales tax exemption if it used in one of the following ways:
- Property used primarily in farming, agriculture, horticulture, or floriculture to produce products for sale.
- Property purchased for incorporation into tangible personal property produced for sale.
- Property used primarily in producing tangible personal property that will be used to produce products for sale.
- Property used primarily in conditioning or holding products produced for sale.
** For brevity, we refer to the four categories (farming, agriculture, horticulture, and floriculture) all under the terms “agriculture” or “agricultural.”
Some other more specialized code sections that provide a sales tax exemption to agricultural producers include:
- Materials for horticulture and livestock structures – R.C. 5739.02(B)(13) and R.C. 5739.02(B)(36)
- Agricultural land tile – R.C. 5739.02(B)(30)
- Grain Bins – R.C. 5739.02(B)(31)
- Preparation of eggs for sale – R.C. 5739.02(B)(24)
What Qualifies?
Beyond the language found directly in the statutes and regulations, it’s important to look at other legal guidance to understand how the sales tax exemption works in practice. Below are several key points about Ohio’s agricultural sales tax exemption that farmers should keep in mind when deciding whether a purchase qualifies.
- Farming, Agriculture, Horticulture, and Floriculture
Before claiming the agricultural sales tax exemption, a producer must determine whether their activity qualifies as “agriculture” under Ohio tax law. Ohio uses the following four definitions to determine what counts as agriculture for the purposes of the exemption:
Farming – occupation of tilling soil to produce crops as a business and includes raising livestock, bees, or poultry, if the purpose is to sell such livestock, bees, or poultry, or the products thereof as a business.
Agriculture – cultivation of the soil for the purpose or producing vegetables and fruits and includes gardening or horticulture, together with the raising and feeding of cattle or livestock for sale as a business.
Horticulture – the growing, cultivation, and production of flowers, fruits, herbs, vegetables, sod, mushrooms, and nursery stock for sale as a business and includes the operation of commercial vegetable greenhouses or nurseries.
Floriculture – the production of flowers and plants for sale as a business, either in the field or greenhouse.
- Primary Use
To qualify for Ohio’s agricultural sales tax exemption, an item must be used primarily in agricultural production. Problems often arise when farmers purchase items like all-terrain vehicles (ATVs) or other utility vehicles that serve multiple purposes on the farm.
Last year, the Supreme Court of Ohio issued a decision that helped clarify how courts should evaluate whether a purchase qualifies for the agricultural sales tax exemption. In Claugus Family Farm, L.P. v. Harris, the Court challenged some long-held assumptions about which types of purchases can qualify for the exemption.
In that case, a timber farm purchased a Mercedes-Benz Geländewagen and claimed the vehicle was used to transport people, chemicals, and equipment necessary to manage and maintain its forest. The Tax Commissioner and the Ohio Board of Tax Appeals (BTA) both concluded that the vehicle did not qualify the agricultural sales tax exemption. The Court, however, disagreed and ruled in favor of the taxpayer.
In Claugus, the tax commissioner argued that the timber farm had not shown that the Mercedes was used primarily for farming because the farm did not keep detailed use or mileage logs for the vehicle. In her opinion, the mere transportation of people and equipment to complete projects around the farm do not count as “primary use” under the tax exemption. The Court rejected that approach, explaining that the statute does not require taxpayers to maintain mileage or use logs. Instead, the Court held that the farm manager’s testimony, stating that approximately 95 percent of the vehicle’s use was related to farming activities, was sufficient to establish that the vehicle was primarily used for farming.
Key Takeaway: Use or mileage logs may be useful evidence when showing that an item is primarily used in agricultural production, but Ohio law does not require taxpayers to maintain written records to meet the primary-use standard.
- The Business Component
To claim Ohio’s agricultural sales tax exemption, it is not enough that an item is primarily used for an agricultural purpose. The purchaser of the item/property in question must also be engaged in the business of agriculture. Ohio law defines a “business” broadly as “any activity carried on with the goal of gain, benefit, or advantage, whether direct or indirect.” R.C. 5739.01(F).
The Supreme Court of Ohio also addressed this business-requirement in Claugus. One argument that the tax commissioner put forth to prove that the Claugus farm was not eligible for the agricultural sales tax exemption was that the farm was not an active business due to its lack of sales, income, and labor expenses. The Court rejected this argument and again ruled in favor of the taxpayer.
The Court made clear that a lack of profit does not prevent a taxpayer from being considered a business under Ohio law. While profits and sales can strengthen a taxpayer’s position, neither is required to meet the statutory definition of a business.
One practical way to support a claim that a taxpayer is engaged in an agricultural business is by filing Schedule F with a federal tax return. That said, Ohio courts and the ODT have also recognized that new and beginning farmers may still qualify for the exemption even if they have not yet filed a Schedule F, so long as they intend to do so in a subsequent year.
Key Takeaway: To qualify for Ohio’s agricultural sales tax exemption, a producer must be actively engaged in an agricultural business. Actual profits and sales are not required under Ohio law, but they can be strong evidence that the operation is a legitimate, profit-driven enterprise.
Common Examples of Items that Qualify under § 5739.02(B)(17)
- Property used Primarily in farming, agriculture, horticulture, or floriculture
- Row-crop and livestock production equipment: Tractors, planters, combines, sprayers, balers, milking equipment.
- ATVs and other utility vehicles: ATVs used to distribute seed or fertilizer, repair fences for livestock operations, or access timber plots for harvest planning may qualify – provided their primary use is farming, not recreation.
- Property Purchased for Incorporation into Tangible Personal Property Produced for Sale.
- Feed, seed, and livestock inputs: These products physically become part of the final agricultural product.
- Fertilizer, pesticides, and soil amendments: These products are incorporated into the production process and materially contribute to the resulting product.
- Packing incorporated in marketable products: Containers and packaging material that become part of the product sold (e.g., plant trays sold with nursery stock).
- Property Used Primarily in Producing Tangible Personal Property That will be Used to Produce Products for Sale.
- Equipment used to make production inputs: Examples include machinery used to prepare items such as feed mixes, compost, or bedding that will later be used in agricultural production can qualify.
- Other “intermediary agricultural production equipment”: We will discuss later how the Claugus decision significantly changed the analysis for this category. For now, it is enough to note that Ohio law no longer requires a qualifying item to be directly used on an agricultural product in order to qualify for the sales tax exemption.
- Property Used Primarily in Conditioning or Holding Products Produced for Sale
- Portable grain bins: Ohio law recognizes that portable grain bins used to store harvested grain prior to sale as a necessary step in bringing products to market.
- Cooling, washing, and sorting equipment: Equipment used to wash, cool, grade, or otherwise condition produce prior to sale qualifies when it preserves or prepares the product for market rather than processing it into a new product.
- Livestock handling and holding equipment: Chutes, pens, and temporary holding equipment used to manage livestock before sale may also qualify.
So Why All the Confusion?
- The Direct Connection.
For many years, Ohio law required that an item be used directly on an agricultural product produced for sale in order to qualify for the agricultural sales tax exemption. That is no longer the case.
The Supreme Court of Ohio’s decision in Claugus clearly explains why this “direct use” requirement no longer applies. In the Claugus case, the tax commissioner argued that the timber farm’s purchase of the Mercedes-Benz vehicle did not qualify for the exemption because the vehicle was not used directly on the timber itself. Instead, the vehicle was used to transport people, supplies, and equipment around the farm – what we will categorize as an “intermediate use.”
The Court rejected that argument. It noted that earlier versions of Ohio’s sales tax statute expressly required that property be used “directly” in agricultural production, but that the General Assembly deliberately removed that word when it amended the statute through House Bill 153 (effective Sept. 29, 2011). The Court explained that when the legislature removes specific language from a statue, that change reflects an intentional shift in meaning.
As a result, the Court held that property may qualify as being used in farming even if it is used to perform intermediate steps in the process of producing agricultural products for sale.
This decision marks a significant departure from past interpretations. Agricultural equipment no longer has to be used directly on crop or livestock to qualify for the sales tax exemption. Instead, equipment may qualify so long as its primary use is agricultural in nature, even if that use is an “intermediate use.”
- Other Statutory Schemes
Another common source of confusion for agricultural producers is that Ohio law does not use a single, consistent definition of agricultural equipment, farm machinery, or agriculture itself. Instead, different areas of Ohio law use different definitions, depending on the purpose of the statute.
For example, Ohio’s motor vehicle statutes define “farm machinery” very broadly. Under R.C. 4501.01(U), farm machinery includes “all machines and tools that are used in the production, harvesting, and care of farm products, and includes trailers that are used to transport agricultural produce or agricultural production materials between a local place of storage or supply and the farm, agricultural tractors, threshing machinery, hay-baling machinery, corn shellers, hammermills, and machinery used in the production of horticultural, agricultural, and vegetable products.”
This definition matters because Ohio law also provides that “farm machinery” is not a motor vehicle for purposes of Ohio’s motor vehicle laws. As a result, the license-plate requirement in R.C. 4503.21, which applies to motor vehicles, does not apply to farm machinery. In practical terms, equipment that qualifies as farm machinery may legally operate without a license plate under Ohio vehicle law.
This inconsistency adds to the confusion when producers try to determine whether an item qualifies for Ohio’s agricultural sales tax exemption. The sales tax exemption uses a far narrower and more use-specific analysis than Ohio’s motor vehicle laws. While motor vehicle statutes focus on road safety and traffic regulation, the sales tax exemption focuses on how property is used in agricultural production. Because the goals of these laws differ, the terms used in each statutory scheme also differ.
The Ag Sales Tax Equation
In conclusion, Ohio’s agricultural sales tax exemption is narrow, fact-specific, and heavily dependent on how an item is actually used.
To qualify a taxpayer must prove the following equation:
Business Component + Primary Use (or Intermediate Use) = Agricultural Sales Tax Exemption
Put simply, a purchase qualifies for the agricultural sales tax exemption when the buyer is engaged in an agricultural business and the item being purchased is primarily used in agricultural (or in an accepted intermediate step along the way).
As clarified by the Supreme Court of Ohio in Claugus, the exemption no longer requires that property be used directly on crop or livestock, but that the primary use must still be agricultural in nature. The Claugus decision can be found by following this link.
At the same time, producers must be mindful that Ohio law applies different definitions of “agriculture” depending on the legal context, and classifications that apply under one section of law do not automatically carry over to sales tax.
Understanding these distinctions can help producers avoid confusion, minimize audit risk, and correctly apply Ohio’s agricultural sales tax exemption.
Tags: Agricultural Sales Tax, Sales Tax Exemption, Ag Sales Tax Exemption, Ag Sales Tax
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As we move into March, we thought it’d be a good time to look back at what committees in both chambers of the Ohio General Assembly got up to in February. Committees in both the House and Senate are considering bills to regulate carbon capture, change the levy process, study the effects of data centers, and more. Here is an update on the bills we are following.
H.B. 170, Carbon Capture—On Tuesday, February 17, the Ohio Senate Energy Committee held its first hearing on House Bill 170, which would give the Ohio Department of Natural Resources (ODNR) the authority to regulate carbon sequestration in the state. We previously wrote about H.B. 170, sponsored by Representatives Robb Blasdel (R-Columbiana) and Peterson (R-Sabina) when it was passed by the Ohio House in October 2025. For a more detailed discussion of the bill, please see our previous blog post, available here.
The Senate Energy Committee heard testimony from Representative Peterson, along with five proponents of H.B. 170. Most of the testimony centered on the idea of the state gaining “primacy,” or in other words, seeking approval from the U.S. EPA for the state to regulate Class VI injection wells instead of the federal government through the U.S. EPA. Basically, sponsors and proponents argued that if the state can regulate Class VI injection wells within Ohio, that will result in a faster permitting process for carbon sequestration projects within the state. Representative Peterson pointed out that by gaining “primacy,” the regulatory decisions would be more connected to the Ohio communities where the wells are located.
Several proponents of the bill also testified, including the American Petroleum Institute, the Ohio Oil & Gas Association, Vault 44.01, Tenaska, and Hocking Hills Energy and Well Service, LLC. Proponents testified that states with primacy over Class VI injection wells were usually able to approve a project within 9-12 months, whereas the federal EPA process could take around two years. Furthermore, not obtaining primacy could mean that Ohio might lose projects and jobs to other states who do have primacy. Faster state approval could create jobs and economic benefits in Ohio for projects that the proponent companies are considering. Some of those projects would be centered around sequestering carbon from ethanol facilities located in Ohio. At present, North Dakota, Wyoming, Louisiana, West Virginia, Arizona, and Texas have obtained primacy to regulate Class VI injection wells. Indiana, Pennsylvania, and Michigan are currently considering legislation to gain primacy. You can read H.B. 170 here.
H.B. 420, Property Tax—House Bill 420 had its first hearing in the House Ways & Means Committee on February 11. Sponsored by Representatives Click (R-Vickery) and Willis (R-Springfield), H.B. 420 would prohibit new continuous levies from being placed on ballots, require continuous levies currently on the books to be converted to fixed-term or renewed levies prior to 2030, and prohibit continuous levies in the state after 2030 unless such levies are specifically authorized by voters. The House Ways & Means Committee heard sponsor testimony from Representatives Click and Willis. Representative Click argued that “each generation deserves the right” to approve or disapprove of a levy tax, and that continuous levies prohibit this right by imposing taxes upon people who didn’t originally vote for them. Questions from members of the committee clarified that if passed, the longest levies would last 10 years, however, levies could also exceed that timeframe if they are fixed to loans for long-term investments made by a school, locality, etc. Representative Rogers (D-Toledo) expressed concerns that if passed, the bill could lead to an upheaval in local funding. You can read H.B. 420 here.
House bill 420 is part of what Representative Click has dubbed a “Taxpayers Freedom Trilogy” bill package that also includes House Bills 421 and 422. H.B. 421 would allow ballot measures to reduce inside millage, and H.B. 422 would establish higher thresholds for levy requests over 1 mill (60%) and 2 mills (66%). Neither of the second or third parts of the “trilogy” have received committee hearings yet. Of note, a second hearing on H.B. 420 was scratched from the February 18 House Ways & Means Committee agenda, and House Speaker Huffman has indicated that it is unlikely that these property tax proposals will pass the House before the summer legislative recess. You can find H.B. 421 here and H.B. 422 here.
H.B. 646, Create the Data Center Study Commission—House Bill 646 had its second hearing in the House Technology & Innovation Committee on February 24. We covered the details of H.B. 646, sponsored by Representatives Click (R-Vickery) and Deeter (R-Norwalk) in an earlier blog post, available here. The hearing drew interested party testimony from numerous groups and individuals, including the Ohio Chamber of Commerce and the Ohio Farm Bureau. The Ohio Chamber of Commerce supported the creation of a Data Center Study Commission but implored the committee to include representation from the tech industry on the Commission, noting that data centers would bring with them jobs, increased GDP, and increased local revenues. Ohio Farm Bureau supported the creation of a Commission to study the impacts of data centers, including the impacts on agricultural land and resources long term, water use, water quality, and other potential environmental impacts. Ohio Farm Bureau also cited the need for a robust regulatory framework for data centers and long-term land use planning, worrying that without such planning, agriculture in the state of Ohio will suffer from loss of land to development and other problems. Individual citizens testified that they would like H.B. 646 to include a moratorium on building data centers while the study takes place and noted that the Commission should consider what happens to data center property after it is no longer in use. You can find H.B. 646 here.
S.B. 285, Recoupment Charges—The Senate Ways & Means Committee heard proponent testimony for Senate Bill 285 during its February 10 meeting. S.B. 285, sponsored by Senator Schaffer (R-Lancaster), would make it explicit that agricultural land converted to certain conservation uses would be exempt from a CAUV recoupment penalty if it was previously used for agricultural purposes. Specifically, land would be exempted if it is given to the Ohio Department of Natural Resources (ODNR) to use as a nature preserve, if it is owned or held by an organization with the purposes of natural resources protection or water quality improvement. The president of the Stream and Wetlands Foundation, based in Lancaster, Ohio, explained during his testimony that the bill would basically be a small technical clarification to previous legislation passed in 2022. Since 2022, some county governments have interpreted current law as requiring CAUV recoupment charges to be paid for land used to protect natural resources, while other counties have not. S.B. 285 would clear up this confusion and affirm that CAUV does not apply to exempted land used for conservation purposes. S.B. 285 is available here.
S.B. 361, Eminent Domain—During its meeting on February 17, the Senate General Government Committee heard sponsor testimony from Senator Schaffer (R-Lancaster) on Senate Bill 361. The bill would prohibit the taking of land by eminent domain for use as a trail for hiking, bicycling, horseback riding, ski touring, canoeing, or other nonmotorized forms of travel. During his testimony, Senator Schaffer gave an example of a property owner in his district whose land would be cut in half by a recreational trail, and asserted that local government shouldn’t be able to take land from a property owner just for recreational purposes. Senator DeMora (D-Columbus) asked for clarification about whether pathways for pedestrian and bike safety along roadways would fall under this prohibition. Senator Schaffer responded that that is not the intent of the bill, and that he would be willing to work with the Committee on language if necessary. S.B. 361 is available here.
Tags: Ohio legislation, property tax, cauv, carbon capture and storage, eminent domain, data centers, land use
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Although farm transition planning often focuses on passing assets smoothly from one generation to the next, in some cases, it may be preferable to skip a generation and distribute assets to the following generation. A Generation Skipping Trust (GST) is an estate planning tool that allows a farm owner to do so. A GST is a concept applied in a trust rather than a specific type of legal instrument or document, and it can be used to designate that certain assets will transfer to the grandchildren's generation, while providing financial benefits from the trust to the children's generation during the children's lifetimes.
Our new bulletin is part of the Planning for the Future of Your Farm series and is entitled Using Generation Skipping Trusts to Transfer Farm Assets. This bulletin explains how a GST works, examines what types of farm assets might be best for a GST, how using GST as a tool might affect your federal estate tax exemption, and how different GST provisions can be used to accomodate the needs of multiple generations of a farm family.
Please check out our new bulletin now available on the Farm Office website, or by clicking here.
The Ohio General Assembly wrapped up its legislative session for the year last week, with much of the late-session energy given to property tax relief. The legislature focused on strategies for reducing Ohio property taxes in five bills it just sent to the Governor (see our earlier post). None of the bills addressed farmland taxation, however. But a bill the legislature might consider when it returns in 2026 does propose changes to Ohio’s Current Agricultural Use Valuation (CAUV) Program for farmland property taxes. H.B. 575, introduced by Rep. David Thomas (R-Jefferson) and Bob Peterson (R-Sabina) proposes a number of revisions to the CAUV program.
H.B. 575 doesn’t propose reductions to CAUV taxes, however. Instead, the bill contains changes to how the CAUV program works. The bill is consistent with plans in Ohio’s House for continuing to address property taxes. Rep. Bill Roemer (R-Richfield), chair of the House Ways and Means Committee where H.B. 575 now sits, stated that the five recently passed bills represented most of the “big structural changes” to property taxation and that the legislature’s future focus will be on “fairness and efficiency.” Sponsor Rep. Thomas agreed, stating that “the changes that need to happen now are about the process, helping taxpayers through the process and transparency.” Process and transparency are two themes in H.B. 575’s revisions. Here’s what the bill proposes to change about Ohio’s CAUV program.
Process changes:
- Removes the annual renewal requirement for CAUV. A landowner would not have to submit a renewal each year after initial approval to enroll in the CAUV program.
- Requires county auditors to provide for electronic filing of CAUV enrollment applications.
- Allows a single operation with non-contiguous land in two or more counties to file one application for all parcels in the county where a majority of the land exists.
- Requires that property tax bills separately state the “CAUV savings” for the parcel.
- Mandates that a county auditor must provide notice of the soil types and CAUV values to landowners in reappraisal and update years.
- Allows the county auditor to value residential property and wasteland below the CAUV value.
Eligibility changes:
- Authorizes continued CAUV eligibility for tracts or portions lying idle or fallow in the previous year due to state or federal disaster or state of emergency declarations.
- Allows CAUV eligibility for contiguous land that is incidental to the primary use of the land for agricultural purposes, including areas for driveways, access roads, staging, barns, and farm markets.
- States that the CAUV minimum acreage requirement can include non-contiguous tracts that are part of a single operation within one or multiple counties.
While the proposed changes won’t affect the CAUV formula or reduce CAUV taxes, the revisions in H.B. 575 do solve many of the fairness and efficiency problems we see with Ohio’s CAUV program. But it may take legislators a while to get to the CAUV bill. It’s one of dozens of bills waiting for consideration by the House Ways & Means Committee. Even so, let’s hope 2026 brings changes to CAUV in the New Year.
Read H.B. 575 on the Ohio General Assembly’s website.
Providing relief for rising property taxes has been top of mind in the General Assembly this past year. Two weeks ago, the legislature passed four bills meant to tackle this issue. The bills, which each take different approaches to lowering property taxes, are now awaiting consideration by Governor DeWine. But how would each bill address property taxes?
House Bill 129—School District Millage
House Bill 129, available here, was introduced by Representative David Thomas (R, Jefferson). In Ohio, we collect property taxes in units of measure called “mills.” Each mill is equivalent to one-tenth of a cent. In the late 1970s, the Ohio General Assembly passed the “20 mill floor” for school districts, which was meant to guarantee districts a baseline of funding.
However, under current law, not all school district levies count toward the 20-mill floor, which can result in higher property taxes. H.B. 129 would change this by including emergency, substitute, incremental growth, conversion levies, and the property tax portion of combined levies when calculating the 20-mill floor for school districts. The thought is that including more types of levies in the 20-mill floor will reduce property tax rates in school districts with these additional levies. For some more background on school districts and the 20-mill floor, Ohio’s Legislative Service Commission (LSC) has a brief on the subject, available here.
House Bill 186—School District Revenue
House Bill 186, sponsored by Representatives James Hoops (R, Napoleon) and David Thomas (R, Jefferson) also focuses on the 20-mill floor for school districts. The bill, available here, would create a tax credit which would prevent increases in school district property taxes from exceeding the rate of inflation. This would only apply to property owners in a school district on the 20-mill floor. LSC’s analysis of the bill, available here, includes helpful examples of how the tax credit would work.
H.B. 186 also modifies property tax “rollbacks” for residential property, which would ultimately increase the total rollback, or savings, for owner-occupied homes, while eliminating the rollbacks for all other residential property.
House Bill 309—County Budget Commissions
House Bill 309 takes a slightly different approach to lowering property taxes by revising the authority and rules for county budget commissions. Sponsored by Representative David Thomas (R, Jefferson), the bill’s text is available here.
County budget commissions are made up of the auditor, treasurer, and either the prosecuting attorney or tax commissioner in each county. If passed, H.B. 309 would allow county budget commissions to reduce millage on any voter-approved levy if the commission deems the revenue is “unnecessary” or “excessive.” This authority to reduce millage on levies would not include debt levies. Further, county budget commissions would not be permitted to reduce a school district’s operating levy below the 20-mill floor, or to reduce any levy collected below the previous year’s revenue unless they are able to offset the reduction using reserve balances, nonexpendable trust funds, or carryover amounts.
House Bill 335—Property Tax Overhaul
Finally, House Bill 335 was also introduced by Representative David Thomas (R, Jefferson). H.B. 335, available here, would limit inside millage collections to the rate of inflation. This would be accomplished by requiring county budget commissions to adjust the rate of each inside millage levy during the reappraisal of all real property performed every six years under Ohio law, or during the update, which occurs every three years. To see some examples of this language in action, see the LSC’s analysis of the bill, available here.
What’s next?
Each of these four bills aimed at lessening the burden of property taxes have been delivered to Governor DeWine, and await his signature before they can become law. We will certainly keep you updated on what happens with each bill. In the meantime, if you’d like more information about property taxes in Ohio, the Ohio Department of Taxation has a great informational guide here.
Barry Ward, Director, Income Tax Schools at The Ohio State University
Jeff Lewis, Legal Associate, Income Tax Schools at The Ohio State University
Tax practitioners, farmers, and farmland owners are encouraged to connect to the Agricultural and Natural Resources Income Tax Issues Webinar (via Zoom) on December 15th from 8:45 a.m. to 3:30 p.m. The event is sponsored by Income Tax Schools at The Ohio State University and Purdue Income Tax Schools.
The webinar focuses on issues specific to farm tax returns related to agriculture and natural resources and will highlight timely topics and new regulations.
The program is an intermediate-level course for tax preparers whose clients include farmers and rural landowners. Farmers who prepare and file their own taxes will also benefit from the webinar.
Topics to be covered during the Ag Tax Issues webinar include:
Outlook for Farm Economy
Legislative and Regulatory Update
Farm Partnership Tax Matters
Installment Method on the Farm
Healthcare Options for Farmers in 2026
Sale and Exchange of Farm Property
Cost Recovery in 2025 and Beyond
CCC Marketing Assistance Loans
Residual Fertility/Fertilizer Deduction
Taxability of Highly Pathogenic Avian Influenza (HPAI) Indemnity Payments
Income Tax Issues - 4-H & FFA Projects
R&D Tax Credits - Credit for Increasing Research Activities (I.R.C. § 41)
Changes to Corporate Transparency Act – Beneficial Ownership Information (BOI) Reporting
Managing Basis in Estates
The cost for the one-day school is $180 if registered by December 1st. After December 1st, the registration increases to $230. Additionally, the course has been approved for the following continuing education credits:
- Accountancy Board of Ohio, CPAs (6 hours)
- Office of Professional Responsibility, IRS (6 hours)
- Supreme Court of Ohio, Attorneys (5 hours)
Registration also includes the Agricultural Tax Issues Workbook. Early registration (at least two weeks prior to the webinar) guarantees that you’ll receive a workbook prior to the webinar.
Instructors will include Jared Foos (President, Foos Garvin Accounting, Inc & instructor for many Ohio and National Tax Courses), Barry Ward, Jeff Lewis, David Marrison, Robert Moore (all with The Ohio State University) and Michael Langemeier (Purdue University).
The live webinar will also feature options for interaction and the ability to ask questions about the presented material.
More information on the workshop, including how to register, can be found at: https://go.osu.edu/tax2025
For any questions, please contact Barry Ward or Jeff Lewis at taxschools@osu.edu
Barry Ward & Jeff Lewis, Income Tax Schools at The Ohio State University
Are you a farmer or farmland owner wanting to learn more about recent tax law changes which were a part of the One Big Beautiful Bill Act? If so, join us for a live webinar on Friday, November 14, 2025, from 10:00 a.m. to noon, as part of our Farm Office Live Series.
To register visit: https://go.osu.edu/register4fol
This webinar will focus on issues related to farmer and farmland owner income tax returns as well as the latest news on CAUV and property taxes in Ohio. This two-hour program will be presented in a live webinar format via Zoom by OSU Extension Educators Barry Ward, David Marrison, Jeff Lewis, and Robert Moore. Anyone who operates a farm, owns farmland, or rents agricultural property will benefit from this timely update.
Topics to be discussed include:
- Tax Provisions of the One Big Beautiful Bill Act:
- Changes to Section 179 Expensing and Bonus Depreciation
- Changes to 1099 Thresholds
- Changes to Estate Tax Exemption
- And many more….
- Tax Planning in Low Income Years
- Residual Fertility / Excess Fertility Deduction
- Research & Development Tax Credit
- Sale of Inherited Farm Assets
- Valuation of Unharvested Crops
- Special Use Valuation
- Income Tax Issues for 4-H & FFA Projects
- Ohio Tax Update (CAUV/Property Tax Update, Income Tax Changes)
Registration: https://go.osu.edu/register4fol
For more information, contact Barry Ward at ward.8@osu.edu or Jeff Lewis at lewis.1459@osu.edu
Tags: One Big Beautiful Bill, tax law, Tax Update, Ag Tax, Agricultural Tax, Farm Tax, Farmland Owner, Farmer, Income Tax
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By Clint Schroeder, Program Manager for Ohio Farm Business Analysis Program and Eric Richer, Field Specialist, Farm Management
With the projected price discovery period now closed for winter wheat Ohio farmers have until September 30, 2025, to select the crop insurance coverage that best suits their operation. However, the decision on policy type and coverage levels for 2026 crops could be impacted by the passage of the One Big Beautiful Bill Act (OBBBA). Signed into law on July 4, 2025, OBBBA offers higher area-based policy coverage levels, increases premium support, and expands support for beginning farmers and ranchers. This article will highlight these key changes so that producers can make more informed decisions for 2026 production on their farm.
Previously, producers that wanted to purchase Supplemental Coverage Option (SCO) as part of their policy were required to enroll those base acres in the Price Loss Coverage (PLC) program. The OBBBA has decoupled SCO from the traditional Farm Bill decision allowing farmers to enroll in either the Agriculture Risk Coverage (ARC) or PLC program. Additionally, premium support, the subsidy for SCO has increased from 65% to 80%. In 2027 SCO coverage will also increase to 90%, up from the current 86% revenue benchmark. This band of coverage is currently available in the form of the Enhanced Coverage Option (ECO). ECO is currently available at two coverage levels, 86% to 90% and 90% to 95%. The premium support for these policies also increased to 80%. It is important to note that SCO and ECO provide coverage above the individuals’ underlying Multi-Peril Crop Insurance (MPCI) policy but are based off of the county’s production for that year. That is to say, SCO and ECO do not provide additional protection at the unit level for each farm, field and crop.
Premium support across all Basic and Optional Units was also increased by 3 to 5 percentage points. While OBBBA did not specifically raise the premium support for Enterprise Units, the increased subsidy for Basic and Optional Units affects the calculation the Risk Management Agency (RMA) uses to set premium support levels for Enterprise Units. Table 1 outlines the premium support for each coverage level under prior legislation compared to current support under the OBBBA.
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Table 1: Premium Subsidy Rates: Prior Legislation vs OBBBA |
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|
|
Prior Legislation |
OBBBA |
||
|
Coverage Level |
Basic and Optional Units |
Enterprise Units |
Basic and Optional Units |
Enterprise Units |
|
50% |
67% |
80% |
67% |
80% |
|
55% |
64% |
80% |
69% |
80% |
|
60% |
64% |
80% |
69% |
80% |
|
65% |
59% |
80% |
64% |
80% |
|
70% |
59% |
80% |
64% |
80% |
|
75% |
55% |
77% |
60% |
80% |
|
80% |
48% |
68% |
51% |
71% |
|
85% |
38% |
53% |
41% |
56% |
Beginning farmers will also receive an increased subsidy that is tiered based on their years of farming. A Beginning Farmer or Rancher (BFR) is now defined as an individual who has not actively operated and managed a farm or ranch in any state, with an insurable interest in a crop or livestock as an owner-operator, landlord, tenant, or sharecropper for more than 10 crop years. Under prior legislation BFRs received premium support of 10%. The OBBBA increases the subsidy amount to 15% for the first two years, 13% in year three, and 11% in year four. Years 5 through 10 will remain at the 10% additional premium support level.
Implications
The 2026 projected winter wheat price for Ohio is now set at $5.76 per bushel, down from $6.06 per bushel in 2025. The volatility factor for 2025 was .23 and decreased slightly to .20 in 2026. The 2026 MPCI wheat policies will use this price and volatility factor to determine producer premiums. SCO and/or ECO area-based policies can then be added as options, if desired. The corn and soybean projected prices will be determined from February 1-28, 2026 with an insurance signup deadline of March 15. Farmers should consult with their crop insurance agent to receive a quote tailored to their crop, county, unit structure, and approved yield. In some instances, reducing individual coverage and purchasing SCO or ECO may provide additional risk protection at a lower cost.
References
Barry Ward, Director, Income Tax Schools at The Ohio State University
Jeff Lewis J.D., Legal Associate, Agricultural and Resource Law Program, Income Tax Schools
The One Big Beautiful Bill (OBBB) Act (H.R. 1), was passed, signed and became law on July 4th. This Act impacts taxes and agricultural policy among a long list of other important issues. In this post, we list important tax provisions that were included in this legislation. Many of the provisions were law as a part of the Tax Cuts and Jobs Act and were extended and in some cases made permanent by this new Act. There were also a few new provisions that were included in this new legislation. This article will summarize the provisions that should prove to be most important to farmers and others with ag interests.
Qualified Business Income Deduction
The 20 percent Qualified Business Income Deduction (QBID) for sole proprietors and pass-through businesses under I.R.C. § 199A is made permanent by this Act. This includes the I.R.C. § 199A(g) deduction for agricultural cooperatives and their patrons.
This new legislation includes a new minimum $400 deduction for taxpayers with at least $1,000 in “active” qualified business income. Both amounts will be adjusted annually for inflation.
Estate and Gift Tax Exemption
This Act permanently increases the estate and gift tax exemption (basic exclusion or Unified Credit), beginning in 2026, to $15 million per person, indexed for inflation.
Individual Income Tax Rates
The OBBB Act permanently extends the tax rates and brackets enacted by the Tax Cuts and Jobs Act.
Standard Deduction
Beginning in 2025, this Act provides an increase in the Standard Deduction to $15,750 for singles, $23,625 for heads of household, and $31,500 for marrieds filing joint. This increased standard deduction is also made permanent.
Personal Exemption
The personal exemption is permanently repealed by this Act.
Temporary Deduction for Seniors
The OBBB Act provides seniors (those 65 years of age and older) with an additional $6,000 deduction for tax years 2025-2028. Married seniors filing joint returns are entitled to the deduction, as long as they meet the income requirements.
The deduction is available for seniors who take the standard deduction or for those who itemize deductions but does begin to phase out for taxpayers with incomes of $75,000 (single) or $150,000 (MFJ).
Child Tax Credit and Other Dependent Credit
The Act permanently creates a child tax credit of $2,200 (adjusted for inflation) (beginning in 2025) for qualifying children under 17. (Income phase-out thresholds - $200,000 for singles and $400,000 for MFJ). The legislation also makes permanent the $1,400 refundable portion of the credit, indexed for inflation.
The Act also makes permanent the $500 nonrefundable credit for other dependents who do not qualify for the child tax credit, including those over the age of 16.
Additional First Year (Bonus) Depreciation Changes
The OBBB Act permanently increases bonus depreciation to 100 percent for property acquired after January 19, 2025. For property placed in service during the first taxable year ending after January 19, 2025, the taxpayer can elect to use 40 percent bonus depreciation. These provisions also apply to trees and vines planted or grafted after January 19, 2025.
Section 179 Expense Enhancements
The Act permanently increases the maximum Section 179 deduction to $2,500,000 and increases the phaseout threshold amount to $4,000,000 for property placed in services in taxable years beginning after 2024. These amounts will be indexed for inflation after 2025.
Exception from Limit on Business Meal Deduction
The 50 percent deduction for meals for the convenience of employers is scheduled to end at the end of 2025.
1099-MISC and 1099-NEC Requirements
The new law increases the payment threshold to $2,000 per payee to file 1099-MISC and 1099-NEC information returns, beginning with payments made in the 2026 tax year. The current threshold of $600 per payee remains in effect for the 2025 tax year. Reminder: Copies of the Form 1099-NEC or 1099-MISC must also be provided to payees.
1099-K Requirements
The OBBB Act also settles the confusion surrounding 1099-K reporting requirements. The Act provides that third-party settlement organizations are not required to issue a payee a 1099-K unless the payee receives over $20,000 in total payments and conducts more than 200 transactions in a year.
Gain from the Sale or Exchange of Farmland Property to Qualified Farmers
The OBBB Act creates a new election for those selling farmland property to a qualified farmer (an individual who is actively engaged in farming). This election allows the seller to choose to pay their taxes on the gain in four equal installments. The election is available to individuals and other entities that have either farmed the property or leased it to a qualified farmer for 10 years prior to the sale.
The seller can only make the election if the land is subject to a covenant or other legally enforceable restriction which prohibits the use of the property other than as a farm for farming purposes for 10 years after the date of the sale or exchange. A copy of the covenant must be filed with the first tax return.
This provision is effective for sales or exchanges occurring in tax years beginning after July 4, 2025.
Clean Fuel Production Credit
The Act extends the clean fuel production credit under I.R.C. § 45Z for fuel sold through December 31, 2029 but the Act restricts the credit to fuel produced from domestic feedstocks. It also reduces the credit for sustainable aviation fuel from $1.75 per gallon to $1.00 per gallon after 2025.
Carbon Oxide Capture and Sequestration Credit
The current I.R.C. § 45Q carbon oxide sequestration credit remains intact as a part of this Act. It does add a provision to allow all uses (not just sequestration) to receive the same $85/ton rate. The credit is not scheduled to expire until 2033.
Clean Vehicle Credits
The Act ends clean vehicle tax credits for all vehicles purchased after September 30, 2025. The Act also ends the alternative fuel vehicle refueling property credit for property acquired after June 30, 2026.
This article highlights tax provisions that should be of primary interest to those involved in farming and agriculture. This article does not summarize all tax provisions found in the OBBB Act. Information on all provisions found in this Act can be found at Congress.Gov by viewing a summary of the Act: https://www.congress.gov/bill/119th-congress/house-bill/1
Reference: One Big Beautiful Bill Act Implements Significant Tax Package, Iowa State University, Center for Agricultural Law and Taxation, Kristine A. Tidgren, July 9, 2025
OSU Extension Announces Two-Day Tax Schools for Tax Practitioners &
Agricultural & Natural Resources Income Tax Issues Webinar
Barry Ward & Jeff Lewis, Income Tax Schools at The Ohio State University
For over 60 years, Ohio State University has been providing continuing education for tax preparers. Ohio State University offers income tax education designed for tax preparers with some experience preparing and filing federal tax returns for individuals and small businesses. Our schools also provide tax education for beginning professionals and for farmers and farmland owners.
This year, our schools will focus heavily on tax provisions included in the One Big Beautiful Bill (OBBB) legislation passed and signed in July. Our schools will also have presenters from the Ohio Department of Taxation focusing on income tax and property tax provisions impacted by the Ohio Biennial Budget.
Instruction focuses on tax law changes and on the problems faced in preparing individual and business (including farms) tax returns. Highly qualified instructors will explain and interpret tax regulations and recent changes in tax laws. These schools and webinars offer continuing education credits for attorneys, CPAs, EAs, CFPs, and other tax return preparers. More information can be found online: https://farmoffice.osu.edu/tax
Our two-day schools (and 4-part webinar) are designed for individuals who have some experience preparing and filing federal and state tax returns. The two-day courses are considered to be intermediate level. Highly qualified instructors will explain and interpret tax regulations and recent changes. Our two-day schools also have instructors from the Internal Revenue Service (IRS) and the Ohio Department of Taxation (ODT).
Highlights include a detailed look at new and updated tax provisions in the OBBB and the Ohio Biennial Budget. We have three chapters in this year’s National Income Tax Workbook (NITW) that haven’t had recently that may be of interest – Religious Organization Tax Issues, Installment Sales and Tax Benefits of Home Ownership.
What sets our schools apart? Our dedicated instructors who work in the tax industry! We don’t just get you through the class, we get you through the tax filing season.
We also offer a two-hour Ethics Webinar and a six-hour Agricultural and Natural Resources Income Tax Webinar for additional continuing education credits. All of our courses are taught by some of the industry's top experts!
Registration for our 2-day schools and four-part webinar includes a hard copy of the 600+ page National Income Tax Workbook prepared by the Land Grant University Tax Education Foundation (“LGUTEF”), access to past workbooks, the opportunity to order the 2026 Checkpoint Federal Tax Handbook at a substantial discount, and 50% off our Ethics/PSR Webinar.
Registration for 2025 is open and can be found by visiting: go.osu.edu/tax2025
If you cannot register online, email taxschools@osu.edu to set up an alternative.
Dates and Locations for 2025 Income Tax Schools
Oct. 29-30 Ole Zim’s Wagon Shed, Gibsonburg (Fremont)
Nov. 3-4 Presidential Banquet Center, Kettering (Dayton)
Nov. 6-7 Old Barn Restaurant & Grill, Lima
Nov. 12-13 Ashland University, John C. Meyers Convocation Center, Ashland
Nov. 17-18 Muskingum County Conference and Welcome Center, Zanesville
Nov. 20-21 Hartville Kitchen, Hartville
Dec. 2-3 Nationwide & Ohio Farm Bureau 4-H Center, Columbus
Dec. 8, 9, 11,12 Four-Part Virtual Webinar Series, Zoom
Special Offerings:
Nov. 24-25 - Intro to Tax Course (Columbus)
Dec. 5 - Ethics Webinar, Zoom
Dec. 15 - Ag Tax Issues Webinar, Zoom
Two-Day Tax Schools Topics Include:
- New Legislation – Focused on tax provisions in OBBB
- Ohio Tax Update
- Individual Tax Issues
- Retirement Tax Issues
- Business Tax Issues
- Religious Organization Tax Issues
- Installment Sales
- Tax Benefits of Home Ownership.
- Business Entity Tax Issues
- IRS Issues
- Trusts and Estates
- Agricultural and Natural Resource Tax Issues
- Rulings and Cases
A sample chapter from a past workbook can be found at:
https://taxworkbook.com/about-the-tax-workbook/
In addition to the tax schools, the program offers a separate, two-hour ethics webinar that will broadcast Monday, Dec. 5th. The webinar is $30 for school attendees and $60 for non-attendees and is approved by the IRS and the Ohio Accountancy Board for continuing education credit.
A webinar on Ag Tax Issues will be held Thursday, Dec. 15th from 8:45 a.m. to 3:30 p.m. If you are a tax practitioner that represents farmers or rural landowners or are a farmer or farmland owner that prepares your own taxes, this webinar is for you. It will focus on key topics and new legislation related specifically to these income tax returns.
Registration, which includes the Ag Tax Issues workbook, is $180 if registered at least two weeks prior to the webinar. After November 29, registration is $230.
Intro to Tax Preparation Course
Our Introduction to Tax Preparation for the Beginning Tax Professional Course is offered in Columbus on Nov. 24-25, at the Nationwide & Ohio Farm Bureau 4-H Center. This introductory course seeks to not only introduce beginning tax professionals to tax verbiage, concepts, and law, but also inject real world experience to help beginning tax professionals avoid mistakes a new preparer generally makes. We begin instruction by covering the basics and by the end of Day 2, attendees will have completed a sample return. For more information on this course see this page: https://farmoffice.osu.edu/tax/introduction-tax-preparation-course
For more information, you can contact Barry Ward or Jeff Lewis at taxschools@osu.edu
They can also be reached by phone. Barry Ward - 614-688-3959, Jeff Lewis - 614-247-1720
Tags: tax, Tax Education, Ag Tax, One Big Beautiful Bill, OBBB, BBB, tax law
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