Nebraska ag producers pay nearly 50 percent more than the national average in property taxes


Deanna Nelson-Licking, The Fence Post

May 10, 2019


Nobody likes taxes, but Nebraska farmers and ranchers have even more to dislike than many others around the country.


According to a study by J. David Aiken, Nebraska agriculture property taxes are among the highest in the United States. Over the last three years, Nebraska farmers and ranchers have paid nearly 31 percent of their net farm income as property taxes (47 percent in 2017). Aiken, an Extension water and agricultural law specialist at the University of Nebraska-Lincoln, said that when state and federal taxes are factored in, this represents an effective tax rate of more than 50 percent (over 60 percent in 2017.) Nebraska property taxes on agricultural land as a percentage of net farm income are 146 percent of the United States average (1950-2017 data). The 20-year average is 150 percent, the 10-year average is 147 percent, the five-year average is 164 percent and the three-year average is 188 percent. Property taxes are the single largest tax paid in Nebraska, accounting for 38 percent of total state and local tax collections.


The study revealed that sales taxes make up 29 percent of total taxes, and income taxes are 26 percent. Sixty percent of property taxes go to K-12 education funding. All property taxes fund local government cities, counties and local school districts. All income taxes and 84 percent of sales taxes are used to fund the state government. Currently with high ag land values across the state, 85 percent of state aid goes to non-agricultural areas and 15 percent is distributed across the board to all school districts. Two-thirds of Nebraska school districts (largely rural) receive little to no state aid.


In Nebraska in 2017, 42,502 farmers paid $686.5 million dollars in property taxes. On a per-farm basis, that breaks down to $16,151 each, second only to California with the average there being $17,229. The national average in 2017 was $4,902, according to data from the 2017 ag census collected by Chris Clayton, DTN ag policy editor.


John ODea lives near McCook, Neb., with his wife and sons. They are feeling the high tax rate, paying $9 a year per acre of grass. More of his tax dollars are given to support Mid-Plains Community College than he can afford to give his own son, who is putting himself through Fort Hays State University in Hays, Kan. This for him was a cheaper option than Southeast Community College in Nebraska.


My sons were talking the other day and they agreed The expense of being a Nebraskan is getting too high, ODea said. The state has turned into two liberal cities that expect the rest of the state to support them. Folks are having to work off the place to support the ranch. Who will feed and pay the taxes if they force everyone out. It is having a ripple effect on small towns and communities. Every ag producer that has to take a job in town is taking that job away from someone else. Im 43 years old and Im paying more for property taxes now than I did for rent when I started. Land in Nebraska is a liability.


ODea feels that there will be some major changes made as producers attempt to refinance land and cattle in the next few years especially with land values going down. The ODea family is seriously considering moving their base of operation to a more ag friendly state in the near future.


The death losses in Nebraska alone will more than offset what USDA estimated that the calf crop was set to increase in 2019. If calf and yearling prices are not considerably higher this fall, our supply and demand market is broken beyond repair. The cow calf expansion phase was at or near its peak, so these losses will pull us back into a shrinking phase in the cow calf sector, ODea said.