DOVER — A bill that would reassess agricultural land based on farm production instead of its development value has been proposed in the General Assembly, seeking to lessen the financial burden on Delaware’s farmers.
Senate Bill 35 would amend the tax policy in Delaware to include “qualified farm structures” as part of the definition for agricultural land, opening the door for a lower tax levied on the property overall. State law currently states that land that is devoted to agricultural, horticultural or forest use for at least two years will be subject to an assessed rate set by the State Farmland Evaluation Advisory Committee.
Qualified farm structures, as defined in SB 35, would include poultry houses, pole barns intended to store equipment or house livestock or silos.
While an adjusted property tax assessed value for farms has been in effect since 1968, Delaware lawmakers like Sen. Kyra Hoffner (D-East Middletown/Townsend) said it’s time to revisit it as reassessment has raised the question of the value of land may make it untenable for farms to stay in business.
As Delaware is winding down its the court-ordered statewide property reassessment winds down, many farmers have raised the alarm about possible property tax increases above and beyond what they could pay as business owners and residents.
“Delaware is a farming state and we need to protect our farmers,” said Hoffner, the prime sponsor of the legislation. The bill was pre-filed before the General Assembly gaveled in this January, and includes co-sponsors from both sides of the aisle from rural pockets of Delaware.
“Every once in a while, we need to help them out. It’s unfair to charge them for some structures that may not even have floors in it like it’s a livable space. This is about protection for the state’s farmers,” Hoffner added.
Under SB 35, if a qualified farm is used for any other use outside of agriculture or rezoned, it would be subject to roll-back tax which would be determined from the value of the land as well as the assessment of its structures. Roll back taxes must be paid 90 days before the due date and include a 6% penalty for the first month with a subsequent 1% penalty for each month that follows until the payment is made.
Eighteen other states have also changed the mechanism for farmland assessment. Rita Jefferson, local policy analyst at the Institute on Taxation and Economic Policy (ITEP), said the problem is becoming more commonplace in the United States.
“The market value of green farmland is totally different from any other vacant land you might find, because it has the potential for food. But if it’s treated like a vacant lot, it would be worth so much more because of the potential for development there,” Jackson said. “So that’s where the struggle is: do we treat farms for their intrinsic value or is it intrinsically valuable to have farmers and open space.”
Policy across the country varies on the fair value of farm land, but some states like Montana include multi-million-dollar homes on large lots that are blanked under tax policy designed to maintain rural land.
SB 35 narrowly limits the definition of qualified farm structures to those focused on production and sale of plants and animals, so that homes would be assessed per fair value, according to the ITEPT.
Tyler Technologies has worked to review homes and other properties across the state as a part of the court-ordered state-wide home reassessment focused on correcting the market value of property assessments as the state has not held periodic reassessments in the past. This lack of consistency meant that reassessment has not occurred in New Castle and Kent counties since the 1980s and Sussex County since the mid-1970s.
Farmers in Delaware started seeing post-assessment property tax bills in the summer of 2024 along with other residents and business owners, some with shockingly high increases.
The Cape Gazette reported last summer that many farms in Kent County would see their taxes increase more than 20%, while other farmers saw increases between 50 and 200%.
The full scope of reassessment is yet to be determined as New Castle and Sussex will not set their tax rates until the spring. But Kent County, the smallest and the least developed of the state’s three counties, has already seen its tax rate jump
$5.36 per $100 in assessed value after its reassessment was completed.
Farmers across the state have argued that much of the land in Delaware is now a hot commodity as single-family homes continue to crop up like corn stalks on what was once a field. As an incentive to keep farmlands from future development, the state launched the Delaware Agricultural Lands Preservation Foundation, under which grants approved applicants exemption from state, county and local taxes.
Those like Bill Powers, the president of the Delaware Farm Bureau and farmer from Townsend, argue that reassessment is not considering the state’s unique struggles when it comes to maintaining open space and farms. He said that SB 35 would help codify Delaware’s continued efforts to protect the agriculture industry.
“When I drive around Sussex County, I can’t believe how much development there is, it’s almost like a different place,” Powers told the Delaware Business Times. “To me, this will preserve the farmer because they have to make a living. When you build a barn for your equipment and chicken houses, that’s an investment into keeping farming going.”
The challenges have never been tougher to weather — Powers noted that the crop yields were tight this summer. Corn prices dropped below $4 a bushel over the summer, the lowest seen
since the summer of 2020. He said that many had to sell 200 bushels just to break even, heightening worries of a possible incoming
agricultural recession in Delaware.
“And that’s not even getting into paying the mortgage and for equipment,” Powers said. “[Congress] just extended the Farm Bill, but it’s just a re-up from the same bill seven years ago, but it’s going to hurt a young farmer because they don’t have the equity of an older farmer that can get credit. It’s a rough time right now.”