Managing a ranch in Texas can be expensive. One way to alleviate costs is to obtain an Ag Exemption on certain purchases used for producing agricultural products on your ranch.
Obtaining a Texas Sales Tax Exemption
In order to claim sales tax exemption, you must apply with the Texas Comptroller to receive an agriculture registration number. This can be done online at Comptroller eSystems User Login (state.tx.us). You only need your ranch information, your social security number, and your Texas Secretary of State number (if you have one).
Once approved, you will receive a Courtesy Card from the state which you will be able to show retailers so that you can receive your sales tax exemption on purchases. If you have multiple individuals who can make purchases for your ranch, you can make copies of the card and distribute to the appropriate people.
In addition, you are responsible for completing the Texas Agricultural Sales Tax and Use Exemption Certificate form with your registration number and providing it to retailers (see Additional Resources).
ALWAYS SALES TAX FREE
Many items you may use on your ranch are always tax free and do not require an ag number or a sales tax free certificate. These include items such as seeds and annual plants, various animals, prescriptions, and feed for ranch animals (for a detailed list, visit Agricultural and Timber Exemptions (texas.gov)).
REQUIRE AGRICULTURAL EXEMPTION CERTIFICATE AND AG NUMBER
However, many purchases require both an Agricultural Exemption Certificate and an Ag Number to be provided to the retailer at the time of purchase.
- animals raised to sell as food, but not ordinarily considered food or required to be inspected by the USDA’s Food Safety Inspection Service, such as rabbits, deer, llamas and bison
- animals raised and shown by students and teachers in 4H, FFA and similar agricultural vocational groups
- fertilizers, fungicides, insecticides, herbicides, defoliants, and desiccants used exclusively to produce timber for sale or on a ranch to produce food or other agricultural products for sale
- machinery and equipment (including repair or component parts) used exclusively on a ranch to produce food or other agricultural products for sale or to build or maintain roads and water supplies
- machinery and equipment used by an original producer for packing and processing agricultural products
- machinery and equipment exclusively used in an agricultural aircraft operation, as defined by 14 CFR Section 137.3
- tangible personal property incorporated into a structure used for poultry carcass disposal components of irrigation systems used to produce food and other agricultural products for sale
- electricity and natural gas used in agricultural operations
- services performed on exempt tangible personal property identified in this list
- telecommunications services used to navigate machinery and equipment exclusively used on a ranch to do one or more of the following:
- build or maintain roads
- build or maintain water facilities
- produce agricultural products to be sold in the regular course of business
MOTOR VEHICLE TAX
Farm trailers and machines can be exempt from the Motor Vehicle Tax using your Agricultural Exemption if it is used in one of the following ways:
- at least 80 percent of the time to produce grass or food for people, animals, or agricultural products for sale; or in processing, packing, or marketing of your own livestock or agricultural products for sale.
- a self-propelled motor vehicle specifically adapted to apply plant food, fertilizer, and agricultural chemicals in producing crops; or to distribute livestock feed in raising livestock
- trailer or semitrailer designed for and used primarily on a farm or ranch
You must present the vendor with a completed Texas Motor Vehicle Tax Exemption Certificate for Agricultural and Timber Operations form at the time of purchase and when registering the title (see Additional Resources).
MOTOR VEHICLE RENTAL TAX
If you rent machines and trailers for the reasons described above, you can claim your tax exemption on the Motor Vehicle Rental Tax by completing the Motor Vehicle Rental Tax Verification Certificate form (see Additional Resources).
GASOLINE AND DIESEL
Unfortunately, gasoline does not qualify for the sales tax exemption. However, you can apply for a refund on the taxes you paid by applying through the Texas Comptroller Office and following the steps outlined in the graphic below.
Only Dyed Diesel for off-highway vehicles and equipment purposes qualifies for a sales tax exemption using your Ag Number. You can apply to receive the exemption on up to 25,000 gallons of dyed diesel per month on the Texas Dyed Diesel Fuel End User Signed Statement Number Registration form (see Additional Resources).
Do you have more questions?
Ryan at Lone Star Ranch Management can answer any questions you may have regarding the Texas Sales Tax Exemptions for ranches. You can call him at 979-253-9662 or email him at email@example.com. Let us help you save more money!
Texas Comptroller’s Website for Agricultural Exemptions: https://comptroller.texas.gov/taxes/ag-timber/