Connecticut Farm Tax Exemptions: PA 490, Machinery, and Sales Tax

Connecticut farm tax exemptions fall into three main categories: PA 490 use-value assessment on farmland, local property tax exemptions on machinery, livestock, and buildings, and a state sales tax exemption on production supplies. Together they can cut a working farm’s tax bill by tens of thousands of dollars a year, but each program has its own income threshold, form, and filing deadline, and missing any of them usually costs you a full year of savings.

Who Counts as a Farmer Under Connecticut Law

Before any exemption applies, your operation has to fit the state’s legal definition of “agriculture” or “farming” under General Statutes § 1-1(q). The definition is broad. It covers cultivating soil, dairying, forestry, raising livestock (including horses, bees, poultry, and fur-bearing animals), harvesting shellfish or fish, and producing maple syrup or honey.¹ Drying, packing, freezing, and delivering crops also count when they’re normal parts of the operation. Greenhouses, hoophouses, nurseries, and orchards all qualify.

One important boundary: cannabis cultivation is explicitly excluded from the farming definition, even though recreational marijuana is legal in Connecticut.¹ A cannabis grow does not qualify for any of the tax breaks below.

PA 490 Use-Value Land Assessment

Public Act 490 is usually the largest single tax break for Connecticut farmers. Under General Statutes § 12-107b, land classified as “farm land” is assessed at its agricultural use value rather than fair market value.² In parts of the state where an acre might sell for hundreds of thousands of dollars, taxing the land on what it produces instead can drop the assessment by 90 percent or more.

Farm land under PA 490 means any tract or tracts, including woodland and wasteland, that together make up a working farm unit.² There’s no minimum acreage, but the assessor decides whether the land actually functions as a farm. Expect them to look at your business plan, photos of activity on the property, equipment on site, crop productivity, and income and expense records from your IRS Schedule F.³ An on-site inspection is routine.

You apply on Form M-29, filed with your town assessor between September 1 and October 31. In a revaluation year, the window extends to December 30. Each parcel needs its own form. Missing the deadline counts as a waiver for that assessment year, with no grace period.

The Ten-Year Conveyance Tax on PA 490 Land

PA 490 classification carries a serious catch. If you sell or transfer classified farm land within ten years of acquiring it or first having it classified (whichever came earlier), Connecticut adds a conveyance tax on top of the normal real estate transfer tax.⁴ The rate starts at 10 percent of the total sale price in year one and drops by one percentage point each year, reaching 1 percent in year ten. After ten full years, no conveyance tax applies. On a $500,000 sale in year three, the penalty would be $40,000, so this is not an afterthought.

Classification is also personal to the owner and does not travel with the land. When property changes hands, the new owner has to file a fresh PA 490 application to keep the reduced assessment.

Some transfers are exempt from the conveyance tax. The law carves out transfers by death (with no money changing hands), deeds between spouses or from parent to child for no consideration, foreclosure deeds, eminent domain proceedings, and transfers to a nonprofit that will hold the land permanently for conservation or education.⁵ A deed with a covenant to keep the land in its classified use for at least eight years is also exempt, though breaking that covenant later triggers the tax at the rate that would have applied on the original transfer date.

Property Tax Exemptions for Machinery, Livestock, and Buildings

Connecticut exempts a wide range of farm personal property from local taxation. The income bar for these exemptions is higher than for the sales tax break: you need at least $15,000 in gross sales from farming, or $15,000 in farm-related expenses, in the tax year immediately before the assessment year.⁶

Farm Machinery

Under General Statutes § 12-91, all farm machinery except registered motor vehicles is exempt from property tax up to an assessed value of $100,000 per qualifying farmer, group, partnership, or corporation.⁷ Horses or ponies used exclusively in farming are fully exempt under the same statute. This applies statewide by default; no town vote is required.

Your municipality can go further. If the local legislative body approves it, the town can add another machinery exemption of up to $250,000, potentially bringing the total to $350,000.⁷ Public Act 24-151 raised that local cap from $100,000, effective June 2024, so older references may be out of date.

Livestock and Poultry

General Statutes § 12-81 fully exempts sheep, goats, swine, dairy and beef cattle, oxen, mules, and poultry kept in Connecticut.⁸ Other livestock is also exempt, but horses and ponies not used in farming are exempt only up to $1,000 in assessed value each. Farm produce still owned by the producer is exempt too. These livestock exemptions apply regardless of the $15,000 income threshold that governs the machinery exemption.

Farm Buildings

Municipalities may exempt farm buildings from property tax, up to $500,000 in assessed value per building, if the local legislative body adopts the option.⁷ The building must be used exclusively for farming or for housing seasonal farm employees; your residence doesn’t qualify. The $500,000 cap was also raised from $100,000 by the 2024 law. Each building is evaluated on its own, so a farm with several barns or greenhouses can stack the exemptions.

Sales Tax Exemption on Farm Supplies

Connecticut’s 6.35 percent sales and use tax doesn’t apply to tangible goods bought exclusively for agricultural production, as long as you hold a valid Farmer Tax Exemption Permit. The income bar here is lower than for property tax relief: at least $2,500 in gross farming income in the prior tax year, or an average of $2,500 across the two prior years.⁹ New owners of an existing farm business may qualify for up to two years without meeting the threshold.

Qualifying purchases include tractors, trucks used only on the farm, refrigeration equipment, feed, fertilizer, seed, and any other tangible goods used solely in production.¹⁰ The word “exclusively” does real work. A pickup that doubles as your personal vehicle does not qualify. Household items, property maintenance unrelated to production, and anything used off the farm are all outside the exemption, and misuse can bring penalties and revocation of the permit.

Local 50 Percent Abatement Option

Some towns add another layer under General Statutes § 12-81m, which lets municipalities abate up to 50 percent of property taxes for qualifying farm businesses.¹¹ This is separate from the exemptions above and requires a vote by both the town’s legislative body and its board of finance. Eligible operations include dairy farms, fruit orchards and vineyards, vegetable farms, nurseries, tobacco farms, commercial lobstering on maritime heritage land, and farms using nontraditional methods like hydroponics.

Not every town has adopted the program, so check with your assessor. Where it exists, abatements typically run for a set number of years and may be renewable. The same $15,000 gross sales or expenses threshold applies.

Forms and Deadlines at a Glance

Each benefit has its own form, filing office, and cutoff. Miss the deadline and you generally lose the exemption for that assessment year.

PA 490 Farmland Classification: Form M-29

File with your town assessor between September 1 and October 31, or by December 30 in a revaluation year. A separate M-29 is required for each parcel. Bring records of your farming activity and your most recent IRS Schedule F,¹² and expect an on-site inspection.

Machinery and Building Exemptions: Form M-28

File Form M-28 (parts A and B) with your town assessor by November 1 each year, along with your personal property declaration.¹³ This is an annual filing. Have your Schedule F ready to prove the $15,000 income or expense threshold.

Farmer Tax Exemption Permit: Form REG-8

Apply on Form REG-8 through the Department of Revenue Services.¹⁰ DRS processes REG-8 renewals through its myconneCT online portal, and new applications may also run through there.¹⁴ Once approved, DRS issues your OR-248 permit, which you show to retailers to buy tax-free. The permit needs periodic renewal.

Business or Hobby? Why Federal Rules Affect State Eligibility

Whether the IRS treats your operation as a real business or a hobby feeds directly into your state eligibility. Under Internal Revenue Code § 183, an activity is presumed to be for-profit if it turns a profit in at least three of the last five tax years. For horse breeding, training, showing, or racing, the standard is two profitable years out of seven.¹⁵

Failing that presumption doesn’t automatically kill the deduction, but it shifts the burden to you. The IRS weighs nine factors, including how businesslike your recordkeeping is, the time and effort you put in, your history of profits and losses, whether the land is appreciating, and how much personal enjoyment you get from the activity.¹⁶ A hobby classification at the federal level means no Schedule F, which knocks out the primary proof of income for both the $15,000 property tax threshold and the $2,500 sales tax threshold. Detailed business records from day one are the best protection.

Appealing a Denied Exemption

If your assessor denies a farm exemption or overvalues your property, the first step is a written appeal to your local Board of Assessment Appeals. Deadlines fall in late February, with some towns extending to mid-March. For 2026, the standard deadline is February 20, or March 20 in towns that adopted the extension. The written appeal form goes to the assessor’s office before that date.

If the board doesn’t resolve it, you can take the matter to Connecticut Superior Court under General Statutes § 12-117a. Court appeals are expensive and technical, so most farmers exhaust the local board process and talk to a property tax attorney before going further.

1
Connecticut General Assembly. Connecticut General Statutes Chapter 1 – Construction of Statutes
2
Justia. Connecticut Code 12-107b – Definitions
3
Connecticut Department of Agriculture. Laws Pertaining to Ag Land Taxation and Preservation
4
Justia. Connecticut Code 12-504a – Conveyance Tax on Sale or Transfer of Land Classified as Farm, Forest, Open Space or Maritime Heritage Land
5
Justia. Connecticut Code 12-504c – Excepted Transfers, Change of Ownership Requirements
6
Connecticut General Assembly. Bill Analysis sHB 7175 – An Act Establishing a Farm Investment Tax Credit and Increasing the Farm Machinery Property Tax Exemption Amount
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Justia. Connecticut Code 12-91 – Exemption for Farm Machinery, Horses or Ponies, Additional Optional Exemptions for Farm Machinery and Farm Buildings or Buildings Used for Housing for Seasonal Employees
8
Justia. Connecticut Code 12-81 – Exemptions
9
Justia. Connecticut Code 12-412 – Exemptions
10
Connecticut Department of Agriculture. Sales Tax Exemption for Farmers
11
Justia. Connecticut Code 12-81m – Municipal Option to Abate Property Tax for Certain Farm Businesses
12
Internal Revenue Service. Schedule F (Form 1040) – Profit or Loss From Farming
13
Connecticut Department of Agriculture. Agricultural Property Tax Exemptions and Abatements
14
Connecticut Department of Revenue Services. REG-8 Farmers Tax Exemption Permit – myconneCT Tutorial
15
Internal Revenue Service. Is Your Hobby a For-Profit Endeavor?
16
Internal Revenue Service. Activities Not Engaged in for Profit Audit Technique Guide