Productive farm land generates more local tax revenue than it uses in services. The “Clean and Green” program is a real estate property tax relief program designed to preserve farm and forest land and help create a fairer distribution of the tax base. It primarily benefits farmers by lowering their local real estate taxes (by lowering the assessed value) based on the use of the land and not its fair market value.
The Pennsylvania Clean and Green program was created in 1974. The state law provides lowers real estate tax assessments to property owners that maintain their land solely devoted to agricultural use, agricultural reserve, or forest reserve use. The program addresses the tax problem created when factors that influence land values impact a farmer’s ability to productively work farm land.
Property owners are eligible to participate if they own at least ten acres of farm, forest or open land. Landowners who have less than ten acres can still qualify if they can prove they earn at least $2,000 of annual gross income from farming.
The Clean and Green program is administered at the county level and offers another welcome benefit for Pennsylvania inheritance tax purposes: this death tax is assessed on the special use value as farmland, even if the farm was not or could not participate in a Clean and Green program in the county of residence.
One disadvantage is the potential for a roll-back of property taxes savings that would be assessed if the property owner voluntarily abandons the Clean and Green program. These back taxes can apply for up to seven tax years plus interest, so it is important to consider your long-term planning goals for your farmland before joining this tax-relief program.
