Hawaiʻi County Agricultural Property Tax Deadline Approaches

Last October I wrote about the changes made in 2023 to the Hawaiʻi County (= Big Island) real property tax structure for getting a break with an agricultural dedication.

The County uses property tax policy to encourage/reward certain uses. For example, full time resident homeowners pay a lower rate and are eligible for a reduction of their assessed value that increases with the homeowners age. The policy I am writing about today is designed to encourage agricultural production on land that is zoned for agriculture, promoting the public benefits of food self-sufficiency and economic resilience for the County and State of Hawaiʻi. Farmers and ranchers operate on small margins, and property tax relief can make the difference between a profitable and unprofitable operation.

My next door neighbors have a hen house. Their layers produce beautiful multi-colored eggs.

When the property owner formally agrees to dedicate a portion of their property (or the entire property if vacant), the County assigns a lower than market value to the acreage being used for active agriculture.

Because of the complexity of the change from two agricultural dedication options to three options, and the more stringent requirements to qualify for the dedication, the County has been holding workshops for property owners for almost a year. One of two deadlines is rapidly approaching!

• Agricultural property owners who were not previously in either the non-dedicated or dedicated agricultural programs must file their applications by September 1, 2025.
• Agricultural property owners who are currently in the non-dedicated program like myself (the option that is being phased out) have until September 1, 2026 to apply. The new dedicated program would go into effect July 1, 2029.

Here is a review of what you need to know to apply.

An orchard of ʻulu (breadfruit trees) on this Big Island farm and luxury residential listing meets the criteria for long-term dedication. See below for why.

What Big Island Properties are Eligible for an Agricultural Property Tax Assessment?

This seems obvious, but the question comes up often. Your property must have agricultural zoning to qualify for an agricultural dedication. Itʻs great if you want to grow food in your backyard in a neighborhood zoned residential – many people in Hawaiʻi have fruit trees and vegetable gardens and even a laying hen or two on smaller lots. You just canʻt apply for an agricultural dedication to reduce your property taxes.

Your parcel  must also meet minimum size requirements depending on the type of agriculture:

• Intensive or diversified agriculture minimum .25 acre
• Orchards minimum 1 acre
• Feed crop or fast rotation forestry minimum 5 acres
• Pasture of slow rotation forestry minimum 10 acres.

On the other side of the coin, factors that would disqualify a property from obtaining an agricultural dedication include:

• properties having a hosted or non-hosted rentals of less than 180 days on site;
• agricultural-zoned property where active and continuous agricultural use cannot be demonstrated.

These two bear a little bit more explanation. As I have written in numerous posts about regulation and registration of short term/transient vacation rentals on the Big Island, vacation rentals are NOT considered an allowable use on ag-zoned property. More specifically, the County zoning sits on top of the State land use classification, and at the State level, the statute generally prohibits short term rentals on property in an agricultural district.

The second one says that being zoned for agriculture is a necessary but not sufficient condition. Now you must demonstrate the actual agricultural use, and the County has set some criteria and documentation requirements for properties to qualify for either short-term or long-term dedication.

The Hawaiʻi County Property Tax Dedicated Agriculture Application

Hawaiʻi County 4-H Livestock Show and Sale – each lamb can sell for $1,000 at auction – and a hog sells for twice that!

Want to go directly to the application forms and view for yourself? Here is a link to the County website where the current forms and explanations can be found: Hawaii County Property Tax Agricultural Programs.

The threshold criteria for proving genuine agricultural use are not onerous. They include:

• A minimum of $2,000 gross income or demonstrated participation in a community-based food sharing program (thatʻs gross, not net!) So claim that income on your taxes…
• Pastures for livestock must have perimeter fencing
• Start up ag operations must demonstrate a minimum investment of $10,000
• Acceptable documentation includes NRCS conservation plan or agricultural easement; organic or food safety certification from USDA, or an acceptable farm plan (the County provides a simple form for your use if you donʻt have a written plan.)

You can also qualify by leasing your land to a farmer or rancher and provided a recorded lease or contract.  On the ZOOM session I attended, the County invited an organization called Go Farm Hawaiʻi to discuss their programs, which include linking graduates of their training programs with landowners open to leasing land for agricultural use.

The property tax savings can be significant, as I explained in my earlier post. If you are trying to decide whether to apply for the 3-year or 10-year dedication, just remember that the long term dedication must be recorded at the State of Hawaiʻi Bureau of Conveyances, which means if you sell your property it will appear on your preliminary title report and could be subject to rollback taxes (meaning if the new owner did not want to continue the ag use, you might owe back taxes as if the property had not been in the dedicated agricultural program).

The Hawaiʻi County Real Property Tax Division staff who have been working with the public on this have been proactive, patient, and gracious. They really deserve compliments for making this complicated transition as user-friendly as possible!