Agricultural Land

How Agricultural Land is Classified

Land parcels under 160 acres must meet the following basic criteria to be classified as agricultural land:

  • Under one ownership;
  • Agricultural production of:
    • food, feed, and fiber commodities;
    • livestock, poultry, bees, and biological control insects;
    • fruits and vegetables;
    • sod;
    • ornamental, nursery, or horticultural crops that are raised, grown, or produced for commercial purposes; and
    • domestic animals and wildlife raised in domestication or a captive environment.
  • The land must produce a minimum of $1,500 annual gross income or the grazing equivalent if the land is used to raise livestock or domestic wildlife. The total number of animal unit months (AUMs) required for eligibility is determined by ARM 42.20.681.

See 15-7-202, MCA, ARM 42.20.604, 40.20.620, 42.20.681 and 42.20.683.

Applying for Agricultural Land Classification

To qualify for agricultural land classification for the current tax year, submit an Agricultural Land Classification Application (Form AB-3) online or to your local field office by March 1.

  • Property owners of a fruit orchard, vineyard, or Christmas tree farm, may apply for provisional agricultural land classification for five years to allow their agricultural product to reach salable maturity. (15-7-202, MCA)
  • To qualify for provisional agricultural land classification for the current tax year, fill out the provisional agricultural land classification section within the Agricultural Land Classification Application (Form AB-3) and submit the completed form online or to your local field office by March 1.

Types of Agricultural Land

Agricultural land has six subclasses to determine the productive value for property tax purposes.

Land Type Use Productivity Commodity
Grazing Land Land used for grazing livestock; includes irrigated grazing land. Animal unit months per acre (AUM/ac) Private Grazing Fee
Tillable Irrigated Land Land irrigated the majority of the time. Tons of alfalfa hay per acre Alfalfa Hay
Non-Irrigated Continuously Cropped Hay Land Land used to produce hay the majority of years. Total dry-weight production Alfalfa Hay
Non-Irrigated Summer Fallow Farm Land Land used for dryland farming. Bushels of spring wheat per acre Spring Wheat
Non-Irrigated Continuously Cropped Farm Land Land used to grow crops 75% of the time; must be an accepted practice for the area and is found in Northwestern Montana. Bushels of spring wheat per acre Spring Wheat
Specialty Crop Farm Land Land used to produce specialty crops. Bushels of spring wheat per acre Spring Wheat

How Agricultural Land Is Valued

We value agricultural land by dividing the net income per acre by the capitalization rate. (15-7-201, MCA)

Net Income Per Acre ÷ Capitalization Rate = Value Per Acre

We determine net income using:
  • productivity,
  • the 10-year Olympic average of the appropriate commodity price,
  • a crop share or livestock expense factor, and
  • for irrigated land, the cost of delivering water from its source to the crop.
We gather production data from the Natural Resources Conservation Services (NRCS) and commodity price data from Montana Agricultural Statistics. (ARM 42.20.681)
Other sources of publicly available information may be used if suggested by the Agricultural Land Advisory Committee and the department adopts it by rule. (15-7-201, MCA)

  • The capitalization rate is set by statute. (15-7-201, MCA)
  • The current rate is 6.4%

For more information on agricultural land valuation, refer to the 2025-2026 Montana Agricultural Land Classification and Valuation Manual (PDF, 847 KB).

Non-qualified Agricultural Land

Non-qualified agricultural land is:

  • Parcels of land, 20 acres or more, but less than 160 acres, that have not met the requirements for agricultural land classification listed above.
  • Valued at the statewide average productivity value of grazing land.
  • Taxed at seven times the agricultural land tax rate.

For more information, please see 15-6-133, MCA and ARM 42.20.681.

Nonproductive Patented Mining Claims

Patented mining claims are land purchased from the federal government for the sole purpose of a mining operation.

 In Montana, property owners must submit an application to the department to secure classification of their patented mining claim as a nonproductive patented mining claim.

The criteria for a nonproductive patented mining claim classification is provided in ARM 42.20.301,  ARM 42.20.302,  ARM 42.20.303,  ARM 42.20.304,  ARM 42.20.305,  ARM 42.20.306,  and  ARM 42.20.307. 

Nonproductive patented mining claim land is valued as agricultural grazing land. (ARM 42.20.681)

To apply, submit a Nonproductive Patented Mining Claim Application (Form AB-13) and return it to your local field office within 30 days from the date on your classification notice to be considered for the current tax year.

(15-6-133, MCA and ARM 42.20.301-307)

Paying Agricultural Land Property Tax

The elected county treasurer in each county bills and collects agricultural land property tax.