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Senate Agriculture weighs letting horse operations qualify for current-use tax break
Summary
The Senate Agriculture Committee heard tax department staff recommend defining equine-related income (boarding, lessons, leasing, breeding, sales) as farm income for current-use enrollment if it constitutes at least 50% of gross income for smaller parcels; fiscal impacts will be updated and language sent to legislative counsel for the miscellaneous bill.
At a committee meeting, the Senate Agriculture Committee heard from the Department of Taxes about a proposed change that would let certain horse operations enroll in the state's current-use tax program if the activity produces farm income rather than hobby income. Tax department staff said the change would be implemented by adding equine-related activities to the statutory definition of farming and applying the existing income test for parcels under 25 acres.
The departments presenter, Jill Ramik, said the recommended approach focuses on income: "farming income can include income related to these items," and listed "boarding, training, lessons, leasing, breeding and sale of horses" as examples the draft language would cover. Under current rules for small parcels, a landowner must derive 50% or more of gross income from the business of farming to enroll; the department said it would treat equine activities the same way.
The recommendation seeks to distinguish bona fide businesses from hobby operations. Committee members asked whether revenue such as riding lessons would count; Ramik said staff review tax returns (Schedule C/Schedule F) to verify that payments were received for services and that additional documentation can be requested when needed. The department also noted that pasture and livestock already qualify when parcels meet the 25-acre threshold, but the proposed change would allow farm buildings on smaller parcels to enroll if the income test is met.
On the budget impact, the tax department cited a prior 2013 sample of 28 towns showing roughly $2.44 million in education-fund revenue loss and a little less than $1 million in municipal revenue when similar enrollments were allowed; staff said they will attempt a current data scrape but cautioned that scaling from 2013 is uncertain. A representative for the industry, Maggie Lens of the Vermont Equine Industry Advocacy Group, said her clients estimate there may be about 30 farms that would fit a narrowly drawn change and described that number as an "unscientific" estimate.
Committee members framed the proposal as an investment in keeping parcels and families in agricultural use, provided the statutory language makes clear the change applies only to bona fide, income-producing businesses. The committee asked legislative counsel to prepare statutory language; staff said they would circulate drafts and send materials to Attorney Shman for review. Members indicated the change will be proposed as part of the miscellaneous bill and moved quickly this session.
No motion or vote was recorded on the floor during this discussion. The committee closed the item after staff agreed to provide draft language for review.
