Applying the Farmland Assessment Law

​Illinois’ farmland assessment law was first passed in 1977 driven by efforts of the Illinois Farm Bureau®. Over the years, a few amendments were made to that law, the last of which was in 2013.
 
Established by the law is a formula that uses income to determine the assessed value of farmland based, in large part, on the soil’s potential to produce a crop, known as the soil's Productivity Index (PI). Prior to the farmland assessment act, farmland in Illinois was assessed based on market value.
 
To reach an assessed value for farmland, the formula is applied to calculate the income potential of every soil based on its PI.  Under the formula, the information supporting the calculation is based on data (collected over a 5-year rolling average) including gross income per acre, minus gross non-land expenses per acre. The result is a per-acre net income. 
 
The per-acre net income is then divided by a five-year average interest rate for farm mortgages. The data used in this calculation establishes an Agricultural Economic Value (AEV) for each soil PI. That value is “equalized” by dividing it by three as Illinois farmland is assessed at 33.3 percent of its AEV.
 
However, there was a change made to the law in 2013. That change, beginning with assessment year 2015 (taxes payable in 2016. The new law now limits value changes of all Farmland PI soils to 10% of Illinois' median cropland soil PI. The median cropland soil PI in Illinois is a PI 111.    
 
Prior to the legislative amendment, each individual soil PI was limited to an increase or decrease of 10% from its prior year’s value. 
 
The Illinois Department of Revenue (IDOR), with the assistance of the University of Illinois, annually calculates these per-acre values for each soil PI. By May 1 of each year, these Certified Farmland Values are provided to the Chief County Assessment Officials (CCAO) to be applied locally to farmland. 
 
In order to apply the assessed values, the CCAO must first determine the classification (or use) of that farmland.  The Illinois Property Tax Code defines those land-use classifications as follows:

• Cropland – All lands from which crops are harvested or hay cut; lands in vineyards, nursery and greenhouse crops.
• Permanent Pasture – Includes any pasture land, except woodland pasture & pasture land qualifying under cropland, (example -rotational pasture).
• Other Farmland – Woodland pasture, woodland including woodlots, timber tracts, & land in forestry program.
• Wasteland – Land that has no production value to the farm (examples – grass waterways, creeks, streams, ponds, some roads).

 
The property is then valued based on its land-use classification as provided below:

• Cropland – Assessed according to Equalized Assessed Value (EAV) as determined by the soil’s productivity index – calculated and certified by IDOR.
• Permanent Pasture – Assessed at 1/3 the EAV as cropland.
• Other Farmland – Assessed at 1/6 the EAV as cropland.
• Wasteland – Assessed on contributory value.  If there is some contributory value to other farmland it is assessed at 1/6 the value of the lowest soil productivity index.  If there is no contributory value a zero assessment might be recommended.

 
It should be noted that homes and homesites on farmland are assessed like most residential property at 33.3% of fair market value. Also note that farm buildings are assessed based on their contributory value to the larger farming operation. 
 
By law, any change in the assessed value of property (other than equalization) must be published in a newspaper of general circulation and mailed to the property owner.
 
Farmland is reassessed every year, unlike most other properties which are reassessed every four years. Because of
this, farmers can expect to be notified annually that the assessed value of their farmland is changing. That change notice will be published in a newspaper of general circulation. That notification triggers a strict timeline to file an appeal. Property owners only have 30 calendar days from the publication date of the assessment change notice to file an appeal on the property’s assessed value. That appeal is filed with the county board of review.
 
However, the assessed value of the soil generally does not change under an appeal. It is more common to see appeals on local farmland assessment practices including changes in land use and the assessed value of farm buildings.
 
As a farm bureau member, you can learn more about the farmland assessment law and how farmland is taxed by signing in to www.myIFB.org. Once there, you will be able to access our farmland assessment information campaign which will provide you with several short videos on how farmland is assessed, a detailed farmland assessment newsletter and a FAQ document.