Farmland Solar Policy Design Toolkit

Current Use Taxation


Understanding Current Use Taxation Policies

Current Use Taxation policies are state beneficial taxation programs in which agricultural land is assessed and taxed at its agricultural value, rather than market value, so long as the land continues to be used or available for agricultural purposes.

These programs may also be open to forestry or other specific land uses. They create an incentive for private landowners to keep their land undeveloped by providing some relief from market pressure to convert agricultural, open space, and forest land to economically “best uses” through development.

Landowners reduce their property tax obligations by limiting the use of their land to a beneficial purpose, like agriculture or forestry, and are subject to tax penalties if the land use is changed.

Agricultural current use taxation programs provide a public benefit by sustaining the variety of services provided by agricultural lands, including greenspace preservation, food production, and ecosystem services like flood control, air quality, biological controls, pollination habitat, and carbon sequestration.

States should carefully consider the types of solar infrastructure to allow on enrolled land to ensure arrays support the underlying beneficial use.

Land Use Conversion

State programs vary on the activities permitted on enrolled land. When a landowner commences a land use not permitted by the state’s current use program, this may constitute “land use conversion,” disqualifying the land from beneficial taxation.

Some states have addressed the addition of renewable energy infrastructure on enrolled land, setting out conditions for renewable energy use and development that are consistent with current use enrollment.

Other states have not yet addressed this issue, making it likely that the addition of solar infrastructure to enrolled land would be considered land use conversion, subjecting the landowner to a conversion penalty or “land use change tax.”

Land Use Change Tax

If land enrolled in a current use program no longer meets the criteria for beneficial taxation, the landowner is likely to be assessed a tax penalty.

This penalty may simply require the landowner to pay the tax rate that would have been applied to the land if it were never enrolled in current use, but could impose additional penalties like “roll-back taxes” requiring the payment of taxes for prior years adjusted to a “fair market value” tax rate.

When rules are established to allow solar development on enrolled farmland without triggering a tax penalty, farmers and agricultural landowners benefit from clean energy serving the farm. 

Additional References
  1. John Bordeau, et al, Rural or Agricultural Lands, 84 C.J.S. Taxation § 596.
  2. Justin Barnes & Chad Laurent & Jayson Uppal & Chelsea Barnes & Amy Heinemann, Property Taxes and Solar PV Systems: Policies, Practices, and Issues, at 45, July 2013 (

How do Current Use Rules affect Farmland Solar Development?

Agricultural land enrolled in Current Use Taxation programs are often barred from installing solar arrays.

Current use policies are protective of farmland, as they support farm viability and long-term agricultural use. However, they can pose a significant barrier to farmers who wish to install a solar array.

States are starting to change their policies to allow limited solar development on enrolled land to avoid farmers and agricultural landowners facing penalties for using renewable energy on-farm.

If a state has not addressed the addition of renewable energy infrastructure to land enrolled in current use taxation, the new infrastructure may be considered “development” or a “land conversion,” disqualifying the underlying land for beneficial taxation and potentially subjecting the landowner to conversion tax penalties.

 Prohibition of Solar Development

Existing current use program rules may not leave any flexibility for solar development, even when the solar array specifically benefits a farm or powers an agricultural use on enrolled land. Agricultural landowners must be very careful to ensure that a solar project is consistent current use program rules and will not subject the landowner to a hefty tax penalty.

When specific rules have not been established for solar development on enrolled land, a proposed array will be judged according to existing program definitions and allowed uses.

Definition of “Farmer”

Some state current use programs define the word “farmer” as a person receiving a certain percentage of their income from agricultural activity or the practice of farming. If income from a solar array changes the farmer’s income percentage, this could disqualify them from current use enrollment.

Definition of “Farm” or “Agricultural Use”

The definition of “farm,” “farming,” or “agricultural use” in a state current use program helps to establish the activities or land uses that qualify for a beneficial tax rate.

If renewable or solar energy infrastructure is not addressed within the current use program rules, this land use may disqualify the land and potentially subject the landowner to conversion tax penalties.

Acreage Requirements

Many state programs have minimum acreage requirements for enrollment in current use taxation. If a solar installation does not qualify as an agricultural use and reduces the total agricultural land acreage of a property, this could disqualify the entire property from beneficial taxation due to failure to meet minimum acreage requirements.

Land Income Requirement

Some states require that land produce a certain quantity of products for sale or actual sale of agricultural goods to qualify for current use enrollment, regardless of what percentage of the landowner’s total income comes from those agricultural sales.

If solar development reduces the quantity agricultural products sold or land income to below program eligibility limits, the land may no longer qualify for beneficial taxation.

Building Envelopes and Farm Buildings

Farms often have outbuildings, barns, and residences on the property. Many current use programs define certain structures as “farm buildings,” meaning that underlying land still qualifies for beneficial taxation.

Other programs may carve out space around existing buildings or dwellings to be included in a “development envelope,” where certain land use changes are permitted to occur.

Renewable energy infrastructure sited on farm buildings or within an established development envelope are much less likely to affect a property’s enrollment in current use taxation, even if a state has not modified its current use rules to address solar development.

Additional References
  1. Doug Stienbarger & Penny Ramey & Eric Lambert, Small Acreage Program & Washington State University: Clark County Extension, Do You Qualify For Reduced Property Taxes? Current Use Taxation (2014) (
  2. Amy Odens, A New Crop for Agricultural Land: The Renewable Energy Mandate and Its Potential to Turn Farm Lands into Energy Fields, 44 McGeorge L. Rev. 1037, 1064 (2013).

Smart Farmland Solar Policy Options

States have begun to develop rules about whether solar development is consistent with current use enrollment and when it will subject the landowner to a tax penalty. These rules might clearly establish that solar development is not permitted on enrolled land or may allow limited solar development based on the system’s size, land use footprint, income potential, the percentage of energy used by the farm, or on a case by case basis.

→ Solar Arrays May Never be Sited on Enrolled Land

Some states refuse to accept solar energy generation as an agricultural use on land enrolled in current use taxation programs. In these states, installation of a solar generating facility on land enrolled in the current use program would result in a revocation of current use enrollment and assessment of land use change penalties. Policymakers may view solar development as an improper use of agricultural land receiving current use benefits, but should be clear in law and regulation that solar development is prohibited under program rules.

→ Solar Arrays are Not Permitted on Quality Soils

States can limit prohibitions on solar development to enrolled land designated as “prime farmland,” “unique farmland,”  “land of statewide importance,” or even “land in agricultural use. This would preserve high-quality soils and productive farmland while leaving room for solar development on enrolled land consisting of marginal farmland and poorer-quality soils.

→ Solar Arrays May be Sited on a Case-by-Case Basis

Some states allow landowners to show that the solar array is being used for agricultural purposes on a case-by-case bases. If the solar array does not violate program rules, the tax assessor will allow the hosting land to retain its tax benefits. This policy is likely the most difficult to implement of all policy options, and leads to confusion among participants and regulators alike.

For example, in Connecticut, tax assessors make decisions about agricultural use on a case-by-case basis based on different farm characteristics. Tax assessors take into account “the acreage of such land, the portion thereof in actual use for farming or agricultural operations, the productivity of such land, the gross income derived therefrom, the nature and value of the equipment used in connection therewith, and the extent to which the tracts comprising such land are contiguous.” While it is not clear that solar arrays are permitted on enrolled land, the program rules leave room for such a determination.

→ Solar Arrays of Limited Size may be Sited on Enrolled Land

Some states allow landowners to site solar arrays of limited capacity on enrolled land, as small-scale arrays are likely to have a minimal impact on agricultural use.

For example, in Vermont, any solar generating facility that is less than fifty kilowatts in capacity and net metered may be located on land enrolled in Vermont‘s Current Use Program without triggering tax penalties. In addition, solar arrays are generally considered as permissible “farmland improvements” when fifty percent or more of the electricity generated from the solar array is consumed on-site.

→ Solar Arrays Serving the Farm may be Sited on Enrolled Land

Some states allow landowners to site solar arrays on enrolled farmland when the array is designed to meet the farm’s on-site electricity load.

“Tier 1 alternative energy systems” as defined under Pennsylvania’s Alternative Energy Portfolio Standard, including solar energy, are permitted on enrolled land when meeting the following requirements:

“Land that is in agricultural use is eligible for preferential assessment under the act if it has been producing an agricultural commodity or has been devoted to a soil conservation program under an agreement with the Federal Government for at least 3 years preceding the application for preferential assessment, and is one of the following:

(1) Comprised of 10 or more contiguous acres (including any farmstead land and woodlot).

(2) Has an anticipated yearly gross income of at least $2,000 from the production of an agricultural commodity.

(3) Devoted to the development and operation of an alternative energy system, if a majority of the energy generated annually is utilized on the tract.”

7 Pa. Code Ch. 137b(12) (2015)

“a. Notwithstanding any law, rule or regulation to the contrary, a person who owns preserved farmland may construct, install, and operate biomass, solar, or wind energy generation facilities, structures, and equipment on the farm, whether on the preserved portion of the farm or on any portion excluded from preservation, for the purpose of generating power or heat, and may make improvements to any agricultural, horticultural, residential, or other building or structure on the land for that purpose, provided that the biomass, solar, or wind energy generation facilities, structures, and equipment:

(1) do not interfere significantly with the use of the land for agricultural or horticultural production, as determined by the committee;

(2) are owned by the landowner, or will be owned by the landowner upon the conclusion of the term of an agreement with the installer of the biomass, solar, or wind energy generation facilities…

(3) are used to provide power or heat to the farm, either directly or indirectly, or to reduce, through net metering or similar programs and systems, energy costs on the farm; and

(4) are limited (a) in annual energy generation capacity to the previous calendar year’s energy demand plus 10 percent, in addition to what is allowed under subsection b. of this section, or alternatively at the option of the landowner (b) to occupying no more than one percent of the area of the entire farm including both the preserved portion and any portion excluded from preservation.

The person who owns the farm and the energy generation facilities, structures, and equipment may only sell energy through net metering or as otherwise permitted under an agreement allowed pursuant to paragraph (2) of this subsection.

b. The limit on the annual energy generation capacity established pursuant to subparagraph (a) of paragraph (4) of subsection a. of this section shall not include energy generated from facilities, structures, or equipment existing on the roofs of buildings or other structures on the farm as of the date of enactment of P.L. 2009, c. 213.”

N.J.S.A. 4:1C-32.4 (2010).

“Land with a solar generating facility may qualify for enrollment in the Current Use Program if the facility qualifies as a farm improvement. In that circumstance, the land and facility may both be enrolled in the Current Use Program. One of the statutory criteria that must be met in order to qualify as a farm improvement is that the improvement must be part of a farming operation.

The Department of Taxes will presume that a facility is part of a farming operation in cases where 50% or more of the electricity generated is used by enrolled farm buildings. Some surplus electricity may be shared with non-farm buildings, or sold, as long as 50% or more of the electricity generated is used by enrolled farm buildings. Generally, a facility that shares or sells more than 50% of the electricity generated is not eligible for enrollment in the Current Use Program. However, an applicant may provide further evidence that a facility is part of a farming operation even though 50% or more of the electricity generated is used by non-farm buildings or is sold. Enrollment decisions are ultimately made by applying the statutory criteria for Current Use eligibility and the applicable statutory definitions.”[1]

[1] Vermont Department of Taxes, Technical Bulletin 69, Solar Generating Facilities Constructed on Land Enrolled in the Current Use Program, July 13, 2015; See, 32 V.S.A. §§ 3752, 3755, 3757, 3802, and 8701 (2019).

→ Agrivoltaic or Dual Use Solar Arrays may be Sited on Enrolled Land

Some states only allow agrivoltaic or dual use solar arrays to be sited on enrolled land without triggering tax penalties. Such projects are valued as they support farm viability, maintain agricultural land uses, and provide farmers with a dual income stream from renewable energy generation.

For example, Rhode Island allows solar develpoment on up to 20% of enrolled farmland acreage, but requires a dual use design for any solar array sited on more than 20% of farmland acreage.

Pursuant to R.I. Gen. Laws § 44-27-2(1)(iii), farmland hosting a solar array continues to be taxed according to agricultural use if the solar array qualifies as a “dual use generation unit,” meeting the following criteria:

  • Array will not interfere with the continued use of the land beneath the unit or around the structure for agricultural purposes;
  • Array is designed to optimize a balance between the generation of electricity and the agricultural productive capacity of the soils;
  • Array is a raised or freestanding structure allowing for continuous growth of crops underneath the solar photovoltaic modules or around the turbine, with height enough for labor and/or machinery as it relates to tilling, cultivating, soil amendments, harvesting, etc. and grazing animals; and,
  • Array complies with applicable Fire Safety, Building Code, and other applicable regulations.
  • Applicant reports annually to the Division of Agriculture of the regarding agricultural productivity, including identification of dual uses, acres of farmland integrated with the project, planned crops and expected harvests, and planned animals and herd sizes;
  • Applicant develops a vegetative management plan (annual landscaping, mowing, etc. surrounding the Dual Use Generation Unit) with the local fire official for a fire permit to be issued; and,
  • Applicant submits a current conservation plan to the Department that ensures continued viability of the farmland during and after the prescribed life of the renewable energy project.

 Solar Development Defers or Cancels Current Use Enrollment without Penalty.

Some states have established provisions for the deferment or cancellation of current use enrollment, in lieu of penalties, to accommodate solar development.

For example, California’s Williamson Act allows landowners to restrict their land to agricultural and compatible uses in exchange for lower property taxes. As solar development has increased on California’s agricultural lands, the rules governing solar development on Williamson Act lands have evolved. Currently, nearly every local jurisdiction in California requires that a Williamson Act contract be canceled to accommodate solar development. The cancellation process can be controversial and requires the local jurisdiction to make specific findings, but the California courts have confirmed that cancellation of a Williamson Act contract in favor of solar development is permissible under certain factual circumstances.

Additional References
  1. Amy Odens, A New Crop for Agricultural Land: The Renewable Energy Mandate and Its Potential to Turn Farm Lands into Energy Fields, 44 McGeorge L. Rev. 1037, 1064 (2013).
  2. Vermont Department of Taxes, Technical Bulletin 69, Solar Generating Facilities Constructed on Land Enrolled in the Current Use Program, July 13, 2015.
  3. David H. Blackwell & Michael Patrick Durkee, The Williamson Act: Siting Implications For California Projects, SOLAR INDUSTRY, June 2010.
  4. Rajinder Singh Sungu, Growing Energy: Amending the Williamson Act to Protect Prime Farmland and Support California’s Solar Energy Future, 21 San Joaquin Agric. L. Rev. 321 (2012).