Property Tax Post: O Christmas Tree! Tax Treatment of Tree Farms Varies by State


 

Christmas TreesMillennials have been blamed for ruining many things, from the housing market to canned tuna, and it appears that affordable Christmas tree are the latest victim. But on this last front in the generational wars, there may be signs for hope. Many states impose special rules for the assessment and valuation of property used for growing Christmas trees, which could in turn affect the final cost to the consumer.

Assessment of property tax begins with valuing the land, which can vary depending on a state’s real property classification system. Many states consider the land used for growing Christmas trees to be agricultural land, which affects how the land is valued. Wyoming considers land for Christmas trees to be “dry cropland” along with land for cereal grains, alfalfa, legumes, and grass hay, or “irrigated cropland” if it has water applied to it by artificial means. In Wisconsin, the growing of Christmas trees is treated as an agricultural use of land, which is valued based on the income that could be generated from its rental for agricultural use. 

However, several states instead classify Christmas tree farms to be forest land, not agricultural. Forest land, usually defined and land that produces wood and timber, is valued differently than agricultural land. Massachusetts and New Hampshire follow this categorization, and the latter expressly does not include Christmas trees in its exemption for wood and timber. Indiana also values forest plantations with timber-producing trees specially (valuing them at $1 per acre), but Christmas trees are not considered timber-producing.

States also vary in how they apply property tax to the trees once they’ve grown. Washington and Oregon provide an exemption for agricultural property grown on agricultural land, such as Christmas trees, from property tax. However, Montana’s exemption for timber specifically excludes cultivated Christmas trees.

However your state assesses Christmas tree farms, shoppers should know that at least a few states exempt purchases of real Christmas trees from sales tax.

Continue the discussion on Bloomberg Tax’s State Tax Group on LinkedIn: Do Christmas tree farms qualify as agricultural land or timberland in your state?

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