Bill
SF 5139
Expands Class 2 agricultural land to include farm wineries, potentially reducing property taxes for eligible parcels starting in 2027.
SF 5139 (Minnesota) – 2025-2026 Session
Class 2 Agricultural Property Classification Modification to Include Farm Wineries
Overview
SF 5139 would modify the definitions and boundaries of Class 2 agricultural property for purposes of Minnesota property taxation to explicitly include farm wineries (as defined by a license under section 340A.315) within the agricultural land provisions. The bill clarifies and expands which lands may qualify for agricultural classification and how mixed-use parcels are valued for tax purposes. The effective date applies beginning with assessment year 2027.
Purpose and Intent
- Align property tax treatment with evolving farm activities by explicitly recognizing farm wineries as qualifying agricultural land.
- Provide a more straightforward pathway for farm wineries and surrounding agricultural activities to be classified under the preferential Class 2 agricultural rates, potentially reducing tax burdens for eligible producers.
Key Provisions and Changes
1) Class 2 Agricultural Property Framework (Section 273.13, Subd. 23)
- Retains and refines the existing Class 2 framework, including Class 2a (agricultural land, with a 1% rate unless part of an agricultural homestead) and Class 2b (rural vacant land, 1% rate unless homestead or other classification applies).
- Adds a new category within agricultural use definitions to explicitly include farm wineries as agricultural products eligible for classification.
2) Agricultural Land Definitions and Eligibility
- Agricultural land includes contiguous land used for agricultural purposes, with detailed criteria for what qualifies as “agricultural purposes.”
- The definition of “agricultural purposes” encompasses a broad set of activities, including cultivation, storage, and processing related to agricultural production, and various conservation programs.
- The bill adds a specific provision under agricultural uses (subd. 23(f)(4)) to include land containing a farm winery licensed under section 340A.315 as eligible for agricultural classification if other requirements are met.
3) Treatment of Mixed-Use Parcels
- As with existing law, if a parcel has both agricultural and non-agricultural uses (e.g., commercial or industrial activities), the parcel is classified in parts according to use, with the agricultural portion classified at the appropriate Class 1b/2a/2b rates and the non-agricultural portion classified by its use.
4) Effective Date
- If enacted, the changes would apply for assessment year 2027 and onward.
Who Is Affected
- Farm winery operators in Minnesota seeking property tax relief under Class 2 agricultural classification.
- Landowners with parcels containing farm wineries and incidental or integrated agricultural activities (e.g., vineyards, orchards, timber, or other agricultural operations) who may benefit from the reduced Class 2 rates on qualifying agricultural land.
Procedural and Timeline Notes
- Bill introduced and referred to Taxes in April 2026.
- Effective date provision indicates a 2027 assessment-year start if enacted.
- Current status shows sponsor and co-sponsor, with typical legislative process to passage or revision.
Impact Considerations
- Potential reduction in property taxes for eligible agricultural land used for farm wineries.
- Administrative implications for assessors to verify eligibility and to apply the new classification consistently.
- Encourages integration of winery-related activities into the agricultural tax framework, potentially benefiting rural agricultural economies.
Compiled from official sources — confirm details with the bill’s official record.
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