Tax Relief for California Agriculture

The grassroots strength of Farm Bureau helped deliver tax equity to the state’s farmers and ranchers. Farmers may be eligible for nearly $60 million in annual savings from state taxes on qualified purchases of equipment, diesel, propane and equine breeding stock. The law took effect Sept. 1, 2001.

A packet of tax-saving documents (PDF, 57 KB) from Farm Bureau tells how farmers and ranchers can qualify for savings contained in the Ag Tax Equity Package.

“This significant tax reduction package is the result of the combined efforts of Farm Bureau and many other agricultural organizations during the past decade,” said George Gomes, California Farm Bureau administrator. “Adoption of this measure reflects what can be done when agriculture pulls together, when county Farm Bureau leaders and members make contact with their local legislators.”

For farmers, tax equity could not come sooner.

“Thanks to Farm Bureau’s tireless work on these tax reductions, I estimate our family alfalfa and hay operation will get over $7,500 in tax savings,” said Siskiyou County Farm Bureau leader Bill Eiler. “That money goes right back into improvements, equipment and the local economy. The way I look at it, this savings pays my Farm Bureau dues for the rest of my life.”

The packet of documents (PDF, 57 KB) includes details and exemption forms. For example:

• Farmers and ranchers will receive a partial sales tax exemption (5.25 percent) on new, used or leased farm equipment, machinery, and their parts.
• Timber operators will receive the same sales tax exemption on their equipment, machinery and parts used to harvest timber.
• Diesel fuel used for agricultural activities and food processing will also be exempt from 5.25 percent of the sales tax.
• All rural residents will benefit from the full sales tax exemption on liquefied petroleum gas (propane).

For more information about the implementation of these changes in law, visit the following State Board of Equalization Web sites:

• Summary of New Sales and Use Tax Exemptions
• Special Notice of New Tax Exemptions describing how to qualify and apply for the tax relief (PDF)