Virginia Farm Tax Exemptions: Sales Tax, Land Use, and Rollback

Virginia farm tax exemptions come in three forms: a state sales tax exemption on supplies and equipment used in commercial agriculture, a land-use value assessment that taxes qualifying farmland on what it produces rather than its market value, and an optional local reduction or exemption on personal property tax for farm machinery. Each program has its own rules, its own paperwork, and its own ways to lose the benefit. The land-use rollback tax, in particular, can wipe out years of savings in one bill if you aren’t careful.

Sales Tax Exemption on Farm Supplies and Equipment

Under Virginia Code § 58.1-609.2, farmers producing agricultural products for sale can buy a broad range of inputs free of the state’s retail sales and use tax. The qualifier that controls everything is “for market.” Vegetables grown for your own table, or horses kept for recreation, do not qualify. The Department of Taxation treats commercial farming and hobby use as different worlds, and a purchase for personal or family consumption is never exempt.¹

The exempt list is wide. It includes commercial feed, seeds, plants, fertilizers, liming materials, agricultural chemicals, farm machinery, baler twine, and containers for fruits and vegetables. Livestock bought for breeding, semen, breeding fees, baby chicks, turkey poults, bees, and llamas qualify. Veterinary medicines and drugs are exempt when used on production animals. The exemption also reaches tangible personal property necessary for agricultural production, such as milking systems, feeding systems, heating systems, and artificial insemination equipment. Beekeeping, fish farming, quail farming, rabbit farming, and worm farming all count as agricultural production when the output is sold.¹²

What Is Not Exempt

Structural materials that become permanently attached to real property are taxable. That category covers barns, silos, sheds, non-portable storage bins, greenhouses used as permanent structures (including plastic-covered hoop houses), permanent fencing, fuel oil storage tanks, farrowing houses, bulk tobacco curing barns, and cattle guards. Electrical wiring and plumbing are taxable too, unless they run directly from special-purpose exempt equipment to an on-off switch.²

The distinction catches farmers often. A portable feed bin is exempt; a permanent one bolted to a concrete pad is not. A milking machine is exempt; the barn around it is not. Before any construction project, separate your list into exempt equipment and taxable structural components so you know what the register will show.

Fuel is also treated narrowly. It is exempt only when used for drying or curing crops. Diesel for the tractor and gasoline for the farm truck remain taxable, despite being obvious farm costs.¹

How to Claim the Exemption

You use Form ST-18, the Sales and Use Tax Certificate of Exemption for farmers. Do not confuse it with Form ST-10, which is the resale certificate for dealers. The ST-18 asks for your name, address, and a certification that everything bought from that supplier will be used exclusively in agricultural production for market.³

Give the completed form to your supplier, who keeps it on file. Recurring purchases from that vendor are then tax-free without resubmitting. Each supplier needs its own copy. The certification is made under penalty of law, so buying personal items on a farm certificate is a fast way to create a problem with the Department of Taxation.

Land Use Value Assessment for Farmland

Virginia’s second major benefit targets real estate. Under the Land Use Value Assessment program, qualifying farmland is taxed on its productive agricultural value instead of its fair market value. Where development pressure has driven prices well above what farm income can support, the difference can be dramatic. A 50-acre parcel assessed at $500,000 for development potential might carry a use value of $50,000 or less, cutting the annual property tax bill by 90 percent or more.

The program is not automatic statewide. The county, city, or town must have adopted a land-use plan and passed an ordinance opting in. Most Virginia localities have done so, but participation is not universal, so confirm with your Commissioner of the Revenue.⁴

Who Qualifies

Virginia Code § 58.1-3230 defines agricultural use as the bona fide production for sale of plants, animals, or products made from them. Land enrolled in a soil and water conservation program under an agreement with a state or federal agency also qualifies.⁵

Minimum acreage under § 58.1-3233:

Agricultural or horticultural use: at least five acres. Localities can set a lower minimum for aquaculture or for specialty crops defined by local ordinance.
Forestal use: at least 20 acres.
Open-space use: at least five acres, though localities may require more. Properties adjacent to scenic rivers or highways may qualify with as little as a quarter acre.

Acreage is the sum of all contiguous land titled in the same ownership, excluding recorded subdivision lots platted after July 1, 1983.⁶

The land must have been in a qualifying use for at least five consecutive years before the application. Some localities add an income threshold. Franklin County, for one, requires agricultural or horticultural land to generate at least $1,000 in gross income per year, averaged over three years. Ask your Commissioner of the Revenue whether your locality imposes a similar standard.

Zoning is not controlling. Virginia law states that zoning designations and special use permits are not the sole consideration for whether land qualifies as agricultural. A property does not lose its agricultural designation just because part of it operates under a special use permit, as long as the rest still meets the program’s requirements.⁵

Applying and Keeping the Assessment

Applications go to the Commissioner of the Revenue or the designated assessing officer in your locality. Under § 58.1-3234, you must file at least 60 days before the tax year for which you want the reduced assessment. For most localities on a calendar-year tax cycle, that’s a November 1 deadline. In reassessment years, the window extends to 30 days after your reassessment notice is mailed, if that falls later.⁷

Most localities accept late filings for a short window, with a late fee that varies. Miss the late-filing cutoff and you wait another full year, with the land taxed at full market value in the meantime.

Expect to prove the land is being farmed commercially. Common documentation includes property maps showing acreage in production, federal Schedule F from your Form 1040, sales receipts, and livestock inventory records. The specific requirements vary by locality, so call early enough to gather what you need.

Getting in is only half of it. Section 58.1-3234 lets localities require revalidation at least every six years, and many require it annually. If a revalidation form shows up in the fall, return it by the stated deadline. Missing it, even by a day past any grace period, can drop your parcels from the program and send them back to full fair market taxation for the following year. Treat the revalidation mailing the way you treat a tax bill.

Rollback Taxes When Land Leaves the Program

The use-value assessment is a deferral, not a permanent discount. Virginia recovers the difference between what you paid at use value and what you would have paid at fair market value when certain events occur. The rollback covers up to the five most recent complete tax years, plus interest at a rate set by the locality.⁸

Triggers include:

A change to a more intensive use, such as converting farmland to residential lots, commercial use, or any non-qualifying purpose.
Rezoning at the owner’s request. Rollback attaches at the time of rezoning, even if the new use has not begun.⁹
Letting the application lapse by missing a revalidation deadline.

The math gets heavy fast. A property assessed at $50,000 in use value while its market value is $400,000, at a $1.00 per $100 rate, produces a single-year deferred tax of $3,500. Over five years with interest, the bill can easily exceed $20,000. Farmers considering selling a portion of their land, or approaching retirement, should run this number before making commitments.

You are required to notify the Commissioner of the Revenue promptly when the use of your land changes. Virginia law imposes penalties for failing to report, and providing false information can void your current application entirely, triggering the full rollback plus a penalty.

The assessment also does not automatically follow the land to a new owner. When enrolled farmland is sold or transferred, the parcel typically comes out of the program and the new owner must reapply within the applicable deadline, demonstrating that eligibility continues. Land splits raise the same issue: the portion sold off may trigger rollback if it no longer qualifies, and the remaining parcel still has to meet the minimum acreage. Notify the Commissioner of the Revenue within 60 days of any ownership transfer or division to avoid penalties.

Local Personal Property Tax on Farm Equipment

Beyond the state sales tax exemption and the use-value assessment, Virginia Code § 58.1-3505 lets localities reduce or eliminate local personal property tax on farm machinery. Farm animals, grains, agricultural products, farm machinery, and farm implements are set apart as separate classes of tangible personal property, and the local governing body can tax them at a lower rate or not at all.¹⁰

The classification is detailed. It covers farm tractors regardless of whether they are used exclusively for agriculture, motor vehicles used primarily for farm purposes that are exempt from registration, privately owned trailers used to transport farm animals or products, equipment used by farm wineries and nurseries, and machinery designed solely for planting, producing, or harvesting a single commodity. Equipment used for forest harvesting and season-extending vegetable hoop houses also qualify under their own subcategories.¹⁰

Whether you actually get a break depends entirely on your locality. Many Virginia counties exempt farm equipment from personal property tax; some don’t, and rates vary. Call your Commissioner of the Revenue to find out what your county does. If you’re evaluating where to base an operation, the local personal property tax treatment is worth checking before signing a lease.

1
Virginia Code Commission. Code of Virginia 58.1-609.2 – Agricultural Exemptions
2
Legal Information Institute. 23 Virginia Administrative Code 10-210-50 – Agriculture
3
Virginia Department of Taxation. Form ST-18 – Sales and Use Tax Certificate of Exemption
4
Virginia Code Commission. Code of Virginia 58.1-3231 – Authority of Counties, Cities and Towns to Adopt Ordinances
5
Virginia Code Commission. Code of Virginia 58.1-3230 – Special Classifications of Real Estate Established and Defined
6
Virginia Code Commission. Code of Virginia Title 58.1, Chapter 32, Article 4 – Special Assessment for Land Preservation
7
Virginia Code Commission. Code of Virginia 58.1-3234 – Application by Property Owners for Assessment
8
Virginia Code Commission. Code of Virginia 58.1-3237 – Change in Use or Zoning of Real Estate Assessed Under Ordinance; Roll-back Taxes
9
Virginia Code Commission. Code of Virginia 58.1-3237.1 – Authority of Counties to Enact Additional Provisions
10
Virginia Code Commission. Code of Virginia 58.1-3505 – Classification of Farm Animals, Certain Grains, Agricultural Products, Farm Machinery, Farm Implements and Equipment