Ad valorem tax; revise provisions relating to determining true value of certain land used for agricultural purposes.

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To: Ways and Means
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Representative McMillan

HOUSE BILL NO. 964

AN ACT TO AMEND SECTION 27-35-50, MISSISSIPPI CODE OF 1972, 1
TO REVISE THE MANNER OF DETERMINING THE TRUE VALUE FOR AD VALOREM 2
TAX PURPOSES OF LAND THAT IS USED FOR AGRICULTURAL PURPOSES AND 3
OWNED OR POSSESSED IN MAJORITY PART BY ANY NONRESIDENT ALIEN; TO 4
DEFINE THE TERMS "NONRESIDENT ALIEN" AND "MAJORITY PART" FOR THE 5
PURPOSES OF THIS ACT; AND FOR RELATED PURPOSES. 6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 7
SECTION 1. Section 27-35-50, Mississippi Code of 1972, is 8
amended as follows: 9
27-35-50. (1) True value shall mean and include, but shall 10
not be limited to, market value, cash value, actual cash value, 11
proper value and value for the purposes of appraisal for ad 12
valorem taxation. 13
(2) With respect to each and every parcel of property 14
subject to assessment, the tax assessor shall, in ascertaining 15
true value, consider whenever possible the income capitalization 16
approach to value, the cost approach to value and the market data 17
approach to value, as such approaches are determined by the 18
Department of Revenue. For differing types of categories of 19
property, differing approaches may be appropriate. The choice of 20
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the particular valuation approach or approaches to be used should 21
be made by the assessor upon a consideration of the category or 22
nature of the property, the approaches to value for which the 23
highest quality data is available, and the current use of the 24
property. 25
(3) Except as otherwise provided in subsection (4) of this 26
section, in determining the true value of land and improvements 27
thereon, factors to be taken into consideration are the proximity 28
to navigation; to a highway; to a railroad; to a city, town, 29
village or road; and any other circumstances that tend to affect 30
its value, and not what it might bring at a forced sale but what 31
the owner would be willing to accept and would expect to receive 32
for it if he were disposed to sell it to another able and willing 33
to buy. 34
(4) (a) In arriving at the true value of all Class I and 35
Class II property and improvements, the appraisal shall be made 36
according to current use, regardless of location. 37
(b) (i) Except as otherwise provided in this paragraph 38
(b), in arriving at the true value of any land used for 39
agricultural purposes, the appraisal shall be made according to 40
its use on January 1 of each year, regardless of its location; in 41
making the appraisal, the assessor shall use soil types, 42
productivity and other criteria set forth in the land appraisal 43
manuals of the Department of Revenue, which criteria shall 44
include, but not be limited to, an income capitalization approach 45
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with a capitalization rate of not less than ten percent (10%) and 46
a moving average of not more than ten (10) years; however, for the 47
year 2022 and thereafter, the moving average for such land, except 48
land devoted to the production of timber, shall be as follows: 49
for the year 2022, four (4) years; for the year 2023, five (5) 50
years; for the year 2024, six (6) years; for the year 2025, seven 51
(7) years; for the year 2026, eight (8) years; for the year 2027, 52
nine (9) years; and for the year 2028 and thereafter, ten (10) 53
years. However, for the year 1990, the moving average shall not 54
be more than five (5) years; for the year 1991, not more than six 55
(6) years; for the year 1992, not more than seven (7) years; for 56
the year 1993, not more than eight (8) years; and for the year 57
1994, not more than nine (9) years; and for the year 1990, the 58
variation up or down from the previous year shall not exceed 59
twenty percent (20%) and thereafter, the variation, up or down, 60
from a previous year shall not exceed ten percent (10%) through 61
the year 2018; and for the year 2019 and thereafter, the 62
variation, up or down, from a previous year shall not exceed four 63
percent (4%). Government payments and crop insurance indemnities 64
shall not be included in determining the true value of such land, 65
and a charge for management of each crop equal to twenty-five 66
percent (25%) of the sum of a crop's estimated variable cost, 67
machinery ownership cost, and general farm overhead cost, shall be 68
deducted in determining the true value of such land. The land 69
shall be deemed to be used for agricultural purposes when it is 70
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devoted to the commercial production of crops and other commercial 71
products of the soil, including, but not limited to, the 72
production of fruits and timber or the raising of livestock and 73
poultry; however, enrollment in the federal Conservation Reserve 74
Program or in any other United States Department of Agriculture 75
conservation program or the fact that the land is leased for 76
hunting or fishing purposes shall not preclude land being deemed 77
to be used for agricultural purposes solely on the ground that the 78
land is not being devoted to the production of commercial products 79
of the soil, and income derived from participation in the federal 80
program or income derived from a hunting or fishing lease may be 81
used in combination with other relevant criteria to determine the 82
true value of such land. The true value of aquaculture shall be 83
determined in the same manner as that used to determine the true 84
value of row crops. From and after January 1, 2027, the 85
provisions of this subparagraph (i) shall not apply in arriving at 86
the true value of any land that is used for agricultural purposes 87
and owned or possessed in majority part by any nonresident alien 88
and the true value of such land shall be determined as provided in 89
this section. For the purposes of this subparagraph (i), the term 90
"nonresident alien" means: 91
1. An individual who is domiciled in a 92
country other than the United States and is neither a citizen of 93
the United States nor a resident of the United States within the 94
meaning of 26 USCS Section 7701(b)(1)(A); 95
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2. A corporation, partnership, limited 96
partnership, limited liability company, trustee or other business 97
entity that is: 98
a. Domiciled in a country other than the 99
United States; or 100
b. Domiciled within the United States 101
but which is in the majority part owned by any corporation, 102
partnership, limited partnership, limited liability company, 103
trustee or other business entity domiciled in a country other than 104
the United States; or 105
3. A foreign government. 106
For the purposes of this subparagraph (i), the term "majority 107
part" means an interest of fifty percent (50%) or more in the 108
aggregate, held by individuals, parties or governments that are 109
nonresident aliens as defined in this subparagraph (i). Majority 110
part shall still apply even if the nonresident alien individuals, 111
parties or governments are not acting in concert. 112
(ii) 1. From and after January 1, 2025, the 113
provisions of this subparagraph (ii) shall govern the valuation of 114
rural structures. The true value of any rural structure appraised 115
before January 1, 2025, shall be recalculated for 2025 and 116
subsequent tax years in accordance with this subparagraph (ii), 117
beginning with a reappraisal of the true value as of the year of 118
the initial appraisal. 119
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2. For purposes of this subparagraph (ii), 120
"rural structure" means any rural secondary building covered in 121
Chapter V of the Department of Revenue appraisal manual, as 122
revised December 2020. The term "rural structure" includes, but 123
is not limited to, silos, grain storage bins, barns and poultry 124
houses, but does not include rural dwellings. 125
3. In arriving at the true value of a rural 126
structure in operation on or before January 1, 2025, the assessor 127
shall follow the guidelines in the Department of Revenue appraisal 128
manual in use immediately prior to the version revised December 129
2020. In arriving at the true value of a rural structure placed 130
in operation after January 1, 2025, the assessor shall follow the 131
guidelines in the most current version of the Department of 132
Revenue appraisal manual. 133
4. After the initial appraisal, the true 134
value of a rural structure shall be based solely on depreciation 135
on a straight-line basis at a rate of seven percent (7%) per year. 136
For as long as the poultry house remains usable and in production, 137
net depreciation shall not fall below twenty percent (20%) of the 138
original true value. Once the twenty-percent threshold is 139
reached, no further depreciation shall be applied for the duration 140
of the operational life of the poultry house. 141
5. Starting with land roll 2009, an 142
adjustment of forty-five percent (45%) for economic obsolescence 143
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shall be applied to all poultry houses used in commercial farming 144
operations. 145
6. If any provision in this subparagraph (ii) 146
is found to conflict with any other provision in this section, the 147
provision of this subparagraph (ii) shall control. 148
(c) In determining the true value based upon current 149
use, no consideration shall be taken of the prospective value such 150
property might have if it were put to some other possible use. 151
(d) In arriving at the true value of affordable rental 152
housing, the assessor shall use the appraisal procedure set forth 153
in land appraisal manuals of the Department of Revenue. Such 154
procedure shall prescribe that the appraisal shall be made 155
according to actual net operating income attributable to the 156
property, capitalized at a market value capitalization rate 157
prescribed by the Department of Revenue that reflects the 158
prevailing cost of capital for commercial real estate in the 159
geographical market in which the affordable rental housing is 160
located adjusted for the enhanced risk that any recorded land use 161
regulation places on the net operating income from the property. 162
The owner of affordable rental housing shall provide to the county 163
tax assessor on or before April 1 of each year, an accurate 164
statement of the actual net operating income attributable to the 165
property for the immediately preceding year prepared in accordance 166
with generally acceptable accounting principles. As used in this 167
paragraph: 168
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(i) "Affordable rental housing" means residential 169
housing consisting of one or more rental units, the construction 170
and/or rental of which is subject to Section 42 of the Internal 171
Revenue Code (26 USC 42), the Home Investment Partnership Program 172
under the Cranston-Gonzalez National Affordable Housing Act (42 173
USC 12741 et seq.), the Federal Home Loan Banks Affordable Housing 174
Program established pursuant to the Financial Institutions Reform, 175
Recovery and Enforcement Act (FIRREA) of 1989 (Public Law 101-73), 176
or any other federal, state or similar program intended to provide 177
affordable housing to persons of low or moderate income and the 178
occupancy and maximum rental rates of such housing are restricted 179
based on the income of the persons occupying such housing. 180
(ii) "Land use regulation" means a restriction 181
imposed by an extended low-income housing agreement or other 182
covenant recorded in the applicable land records or by applicable 183
law or regulation restricting the maximum income of residents 184
and/or the maximum rental rate in the affordable rental housing. 185
(e) In arriving at the true value of ground leases on 186
real property leased by the Mississippi State Port at Gulfport, 187
the assessor shall use the appraisal procedure set forth in land 188
appraisal manuals of the Department of Revenue. Such procedure 189
shall prescribe that the appraisal shall be made according to 190
actual net ground rent attributable to the leased premises, 191
capitalized at a market value capitalization rate prescribed by 192
the Department of Revenue that reflects the prevailing cost of 193
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capital of commercial real estate in the geographical market in 194
which the Mississippi State Port at Gulfport is located. As used 195
in this paragraph (e): 196
(i) "Ground leases" means those leases of land 197
where the Mississippi State Port at Gulfport is the landlord and a 198
person or business entity is the tenant. 199
(ii) "Ground rent" means the rent paid to the 200
Mississippi State Port at Gulfport in a set amount for a specific 201
length of tenancy where the amount of rent may be adjusted from 202
time to time based upon market indices, such as the consumer price 203
index. Ground rent does not include percentage rent and rent 204
based on improvements or any other type of rental payment. 205
(iii) "Percentage rent" means the rent paid to the 206
Mississippi State Port at Gulfport that is calculated based upon 207
revenue generated by the tenant by virtue of the ground lease. 208
(iv) "Rent based on improvements" means the rent 209
paid to the Mississippi State Port at Gulfport that is calculated 210
based upon investments in improvements to the leased premises made 211
by tenant. 212
(5) The true value of each class of property shall be 213
determined annually. 214
(6) The Department of Revenue shall have the power to adopt, 215
amend or repeal such rules or regulations in a manner consistent 216
with the Constitution of the State of Mississippi to implement the 217
duties assigned to the department in this section. 218
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ST: Ad valorem tax; revise provisions relating
to determining true value of certain land used
for agricultural purposes.
(7) When promulgating its annual table of inflation factors 219
for industrial property, the Department of Revenue shall include 220
commercial solar and wind facilities as a separate category of 221
industrial property. If Marshall Valuation Service has not 222
provided an inflation factor for commercial solar and wind 223
facilities for a particular year, the department shall set such 224
inflation factor at 1.000. 225
SECTION 2. This act shall take effect and be in force from 226
and after July 1, 2026. 227