Recent Blog Posts

Legislation introduced over a year ago to allow for carbon capture and storage (CCS) activity in Ohio has progressed through the Senate, but in a different version than passed by the House.  Deliberation in the Senate Energy Committee led to a substitute bill that unanimously passed the Senate on May 20. We reported previously on the version of the bill the House passed on October 8, 2025.

Like the House-passed version of the bill, Sub H.B. 170 authorizes CCS activity in Ohio, which is the process of injecting carbon dioxide into the “pore space” of a sub-surface storage facility through a permitted Class VI underground injection well.  Read more about CCS in our earlier article.  Sub-H.B.170 follows the House version by clarifying landowner rights in pore space, the right to separately convey pore space, and the relationship between pore space and other property interests.  It charges development of the regulatory program for CCS to the Ohio Department of Natural Resources Division of Oil and Gas Resources Management and provides guidelines for program regulations. The bill also authorizes statutory consolidation or “pooling” of pore space interests, sets fees and penalties, and addresses project closure and liability for injected carbon dioxide.   

The primary differences in the Senate’s Sub H.B. 170 passed on May 20 include:

Drainage systems.  Requires CCS project owners, when ground disturbance is necessary, to review rather than map field drainage systems and determine ways to mitigate or avoid drainage system damages and repair or restore drainage conditions.

Innovation with CO2.  Authorizes the Chief of ODNR to create a program to incentivize innovation for the use and reutilization of capture carbon dioxide.

Host community fund.  Establishes a three-cent per metric ton fee to support a fund directed to the treasurer of the host county, to be used by county commissioners or disbursed to townships, municipalities, schools, or other political subdivisions for use pertaining to infrastructure, parks and recreations, education, and public safety.

Statutory consolidation or “forced pooling” applications.

• Requires  a CCS project operator to make three separate attempts to contact all known pore space owners, to engage in good faith negotiations to obtain pore space rights, to obtain the consent of at least 75% of pore space owners within a proposed project prior to applying for statutory consolidation of pore space interests.  The House version contains a lower requirement of 70%.
• States that an order approving a statutory consolidation application must ensure a fair and reasonable manner of compensation and equitable terms and conditions.
• Clarifies that a grant of statutory consolidation does not also grant rights to surface use or access absent a surface use agreement.
• A $50,000 fee for statutory consolidation applications.
• Allows drilling permit applications when a statutory consolidation application is pending.

Fees.  Reduces the injection fee a storage operator pays to the State from 5.25 cents per ton to 5 cents per ton.

Appeals.  Establishes a process for appealing any order under the CCS program to the oil and gas commission.

Financial assurance instruments.  Expands CCS project operator financial assurance instrument options beyond surety bonds, to also include letters of credit, insurance, escrow, or self-insurance.

Sub-H.B. 170, must now return to the House for concurrence with the Senate-approved language. Industry supporters behind the legislation are encouraging the legislature to act soon on reconciling the two different versions of the bill.  We'll keep an eye out for what happens next with CCS legislation.

We’re thrilled to invite you to the Fourth Annual Cultivating Connections Conference, proudly presented by The Ohio State University’s Agricultural & Resource Law Program and Iowa State University’s Center for Agricultural Law and Taxation, in partnership with the National Agricultural Law Center. 

Whether you’re a legal professional, tax advisor, farm transition planner, student, industry partner, or simply passionate about the future of family farms, this conference is designed for you. Over the dynamic multi-day conference, you’ll gain timely insights, practical strategies, and valuable connections to help navigate today’s evolving landscape of farm transition and succession planning. 

Mark your calendar: August 3-5, 2026
Location: The Grand Event Center, just steps from The Ohio State University in Columbus, Ohio. 

Cultivating Connections is offered in a convenient hybrid format, giving you the flexibility to join us in person or participate virtually from anywhere. No matter how you choose to attend, you’ll be part of an inviting, collaborative community focused on sharing knowledge and building meaningful connections. 

Registration:
- In-person | $375
- Online | $325
- Student | $100 (see more below)

Link to Register: https://go.osu.edu/cultivatingconnections

Why Attend?

Whether you are advising clients, shaping policy, or building your legal career, this conference offers: 

• In-depth education on emerging legal issues
• Continuing Education opportunities
• Networking with practitioners, academics, and professionals
• Practical tools you can apply in your own practice

Agenda Highlights

Participants can look forward to a rich program featuring sessions such as: 

• Reverse Mentoring: The Invisible Org Chart
• Identifying and Addressing Mental Health Issues in Farm Families
• Farm Transition from a Farm Manager’s Perspective
• Agricultural and Conservation Easements in Farm Transition Planning
• Incorporating Divorce Protection in Business Entities
• Dealing with Farm Assets Trapped in Corporations
• Managing Tax Basis in Estates
• Reviewing Available Resources for Your Clients
• The State of the Farm Economy
• An Interactive Case Study
• Responsibilities in Assessing Client Capacity

In-person Attendees

Attendees joining us in person on August 3 will enjoy several exciting networking opportunities, including: 

• A behind-the-scenes tour of Ohio Stadium
  • Attendees receive a complimentary tour; guests are welcome at a discounted price of $20/each
• A 1.0-hour Ethics CLE session focused on Name, Image, and Likeness (NIL) representation at Hofbrauhaus
• Following the Ethics CLE, a welcome reception at Hofbrauhaus to connect with fellow attendees and speakers 

Please note: these experiences are available only to in-person participants. We are unable to livestream the Ethics CLE from Hofbrauhaus currently. 

Online Attendees 

The conference is designed as a hybrid event: 

• The opening day (August 3) features in-person programming
• The remaining two days of the conference (August 4-5) will be simulcast, allowing virtual attendees to participate fully in the educational sessions

Special Student Pricing

Students are encouraged to attend and engage with current professionals and industry partners working in the area of farm transition and succession planning. 

• Student Registration: $100
• To register at this reduced rate, students must contact: 
  • Peggy Hall at hall.673@osu.edu 

Link to Register: https://go.osu.edu/cultivatingconnections

Questions?

For additional details about the conference, agenda, or registration, please contact: 

• Ellen Essman at essman.23@osu.edu

The Lowering Input Costs for American Farmers Act was introduced in the U.S. Senate on Tuesday, April 28, 2026.  Sponsored by Senator Roger Marshall (R-Kansas), and co-sponsored by Senator Grassley (R-Iowa), Hyde-Smith (R-Mississippi), and Ernst (R-Iowa), the bill would eliminate tariffs on phosphate fertilizer and related products coming from Morocco.  We have previously discussed the rising costs of fertilizer and other inputs both on Farm Office Live (upcoming schedule and previous videos available here) and in this blog post which examined the conflict in Iran and its contribution to rising prices.

What steps would the bill take to lower costs?

As mentioned above, the bill would eliminate tariffs on phosphate fertilizer and related products imported from the Kingdom of Morocco. Eliminating these tariffs would be significant, since Morocco is the leading exporter of phosphate fertilizers, holding about 70% of the world’s phosphate rock reserves. Since the Trump Administration took office in 2025, baseline tariffs on Moroccan goods have reached up to 10%.  If the bill is enacted, the elimination of any tariffs on phosphate fertilizer and related products would take place within 7 days of enactment.

 Secondly, if passed, the bill would revoke countervailing duty orders on imports from Morocco within 4 business days. These countervailing duties were first imposed in March of 2021, after Mosaic, a U.S. fertilizer producer, filed a complaint against the OCP Group, a phosphate exporter owned by the Moroccan government. According to congress.gov, a countervailing duty (CVD) is an additional tax or tariff placed on imported goods to offset certain kinds of subsidies provided by an exporting country. (If you’d like to learn more about CVDs, congress.gov has a longer explanation available here). Here, the U.S. (the importer) placed an additional tax on phosphate fertilizer and other related products coming from Morocco (the exporter), because the U.S. felt that the Moroccan government was unfairly subsidizing its phosphate industry. Research conducted by the Agricultural and Food Policy Center at Texas A&M University asserts that CVDs on phosphorus fertilizers have cost U.S. producers $6.9 billion from 2021 to 2025.  Thus, revoking the CVDs on phosphate products from Morocco would likely mean a substantial price cut for producers buying phosphate fertilizer.

Both the tariffs and the countervailing duties on phosphate from Morocco have contributed to higher prices for U.S. producers.  By eliminating these tariffs, the bill would lower the price of phosphate fertilizers for American farmers.  The text of the Lowering Input Costs for American Farmers Act is available here.  For additional reading, a press release from Senator Marshall’s office about the bill is available here.  We will be sure to keep you updated as the bill progresses through Congress.

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: 

1. Property used primarily in farming, agriculture, horticulture, or floriculture to produce products for sale. 
2. Property purchased for incorporation into tangible personal property produced for sale. 
3. Property used primarily in producing tangible personal property that will be used to produce products for sale. 
4. 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. 

1. 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.
    
2. 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.
    
3. 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)

1. Property used Primarily in farming, agriculture, horticulture, or floriculture
   1. Row-crop and livestock production equipment: Tractors, planters, combines, sprayers, balers, milking equipment. 
   2. 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.

2. Property Purchased for Incorporation into Tangible Personal Property Produced for Sale. 
   1. Feed, seed, and livestock inputs: These products physically become part of the final agricultural product. 
   2. Fertilizer, pesticides, and soil amendments: These products are incorporated into the production process and materially contribute to the resulting product. 
   3. Packing incorporated in marketable products: Containers and packaging material that become part of the product sold (e.g., plant trays sold with nursery stock). 

3. Property Used Primarily in Producing Tangible Personal Property That will be Used to Produce Products for Sale. 
   1. 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. 
   2. 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. 

4. Property Used Primarily in Conditioning or Holding Products Produced for Sale
   1. 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. 
   2. 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. 
   3. 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? 

1. 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.” 

2. 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.