Vermont first passed the use value appraisal program (Current Use) in 1978. Now about 1/3 of Vermont’s total land area is enrolled in Current Use. Because the program helps many of Vermont’s farms stay in business and resist the financial lure of selling land into development, Rural Vermont has defended and helped strengthen Current Use throughout its existence.
What is Current Use or Use Value Appraisal?
Current Use is fair taxation. In order to encourage the use of land for agricultural production or forest management, the state of Vermont has adopted policy that allows farmers and foresters to enroll their land in the Current Use program. The land is then taxed at the use value rather than the fair market value – so the land is appraised at what it is used for, rather than what it could be sold for at the highest market value. Farmers and foresters then pay taxes based on this appraisal rate, which is calculated through a statutory formula. The Current Use Program includes a Land Use Change Tax as a disincentive to develop land. The program is administered by the Vermont Department of Taxes.
Why do we have Current Use?
The state created Current Use “to encourage and assist the maintenance of Vermont’s productive agricultural and forest land; to encourage and assist in their conservation and preservation for future productive use and for the protection of natural ecological systems; to prevent the accelerated conversion of these lands to more intensive use by the pressure of property taxation at values incompatible with the productive capacity of the land; to achieve more equitable taxation for undeveloped lands; to encourage and assist in the preservation and enhancement of Vermont’s scenic natural resources; and to enable the citizens of Vermont to plan its orderly growth in the face of increasing development pressures in the interests of the public health, safety and welfare.” – 10 VSA 3751
Recent Issue History
June 2015: Current Use Program Remains Vulnerable in Tight Budget Times:
As has been the case in every legislative session in recent memory, the Current Use Program, which provides tax equity for owners of farm and forest land, was again the target for structural changes as a way of generating more revenue for the state.
In the end, a House/Senate conference committee on the annual revenue bill agreed on changing the withdrawal penalty to 10% of fair market value for a parcel that is withdrawn. For a landowner that withdraws their entire land, the previous penalty was 20% of fair market value if enrolled for less than 10 years, and 10% for enrollment over 10 years. So this part of the penalty stays the same, or goes down from 20% to 10% if enrolled for less than 10 years. You can read Act 57 as enacted here. The specific section having to do with the adjustment in the Land Use Change Tax rate can be found on page 75, under Current Use Section 48 – 3757.
The part of the penalty that got strengthened is the partial withdrawal of land for development or subdivision. These parcels will now be taxed at 10% of the stand-alone value of the parcel, and not the diluted penalty that exists today. While this change may adversely affect some long-time farm families, the other options on the table, including increasing taxes on farm buildings by 30%, or freezing enrollment in the Current Use Program for 3 years, were worse.
Some compromise was needed to keep the program intact and the legislature decided to strengthen the land use change tax as the least damaging option. There is a hardship provision for farmers in existing law. If a farmer needs to sell a lot or two to keep the farm operation going, they can file for an abatement of the land use change tax. There is also an “easy out” provision that allows landowners to withdraw land before the new penalty kicks in on October 1, 2015.
H.35, the new Water Quality bill, which provides policy and some funding for improving Vermont’s state waters especially Lake Champlain, contains a provision which would use removal from the Current Use Program as a “last resort” enforcement penalty against land owners who consistently fail or refuse to comply with state water quality requirements. However, this provision, along with many others in H.35, will be spelled out in more detail through a public rule-making process scheduled to be completed by January of 2016.
The following information is courtesy of the VT Department of Taxes
Sept. 1: Deadline for New Current Use Annual Agricultural Certification
The legislature created a new annual requirement for owners of agricultural lands and buildings enrolled in the current use (Use Value Appraisal) program (Act 57, Sec. 57). On or before Sept. 1 of every year, an owner must certify in writing that all enrolled agricultural land and buildings continue to meet the requirements for enrollment at the time of certification. Earlier this month, the Department mailed the annual agricultural certification (link here to an example of the CU-313) to qualifying enrollees. If you received a form, you must return it to the Department by Sept. 1.
For forest landowners:
Forest landowners, whose “agricultural” land represents <20% of their current use parcel and is no longer used for agricultural purposes, may consider transitioning this land to another eligible category, such as “Open Idle Agricultural Land under the 20% requirement.” Here’s how to do this:
- Form CU-313, Agricultural Certificate, may be corrected by the landowner, signed, and returned to the Department of Taxes by Sept. 1
- Because newly-designated open idle agricultural land will come under the purview of the Department of Forests, Parks and Recreation (FPR), shifts in enrollment will be treated as an amendment to the forest management plan. FPR will require the following by Oct. 1:
- New maps (3 copies) of the parcel
- A brief note describing the changes
New publications or eCuse reporting are not required unless there is a change in enrolled acreage.
Oct. 1: Current Use Easy-Out Deadline
During the 2015 legislative session, the Vermont legislature made a number of changes to the law affecting the current use (Use Value Appraisal) program. One of these changes was a new calculation for the land use change tax (LUCT). When changes of that nature are enacted, the legislature has elected to grant an easy-out period for enrollees. This temporary period allows landowners to remove a parcel, or part of a parcel, without paying the first $50,000 of LUCT. You must apply by Oct. 1, 2015.
If you apply for the easy-out, please note that owners of the withdrawn land will pay the full amount of property taxes for the 2015 tax year on the withdrawn land. As a result, the towns will need to re-send bills for the withdrawn land during the easy-out. Withdrawn land may not be re-enrolled in the program for five years.
If you have questions about the process, please contact the Current Use Division at 802-828-5860.
Effective Oct. 2, 2015, the Land Use Change Tax will be 10% for all land developed or withdrawn. Our fact sheet provides an overview of the legislative changes impacting lands in current use.
- Vermont Natural Resources Council overview on the Current Use program and the Current Use Task Force
- Agency of Natural Resources Dept of Forests, Parks, and Recreation resources on Current Use
- Current Use Tax Coalition (CUTC) 2013 Brochure
- 2013 CUTC platform on Current Use, endorsed by Rural Vermont
- The Vermont Statute
- VT Tax Dept. Info
- Rural Vermont’s 2010 factsheet on H. 485
- Rural Vermont’s position on H. 485, the 2010 current use bill
- The Final Report and Recommendations on Changes to Use Value Appraisal, written December 11, 2009. Or a one page summary
- A Report on Options for Improving the Effectiveness, Efficiency and Fairness of Use Value Appraisal and Reducing Expenditures or Increasing Revenues by at least $1.6 million in FY2011, written September 8, 2009
- 2008 Report of the Use Value Appraisal Task Force
- Testimony of Amy Shollenberger to Senate Natural Resources Committee on Current Use, 2/1/2008 (pdf)
- 10/24/2007 RV comments on Current Use (pdf)
- 2007 Current Use Report from the state
- H. 540 Definition of a Farmer for Current Use, 7/4/2005 (pdf)
- 2002 Current Use Report from the state