Data supporting Tax Calculations

Calculating taxes paid by average Mason County Farmland Acre

Assumptions

$119,818,147Assessed value for farmland  
$795.01Average Assessed farmland value per acre (Assessed value / total acres)
$0Tangible Personal Property value / current farmland acre

Mason County KY’s 2019 average property tax per farmland acre

Total Acres158,080
Total acres considered farmland150,712
Total annual Property Tax from farmland$1,289,962
Average Tax from a farmland acre (Total Tax from farmland / acres considered farmland)$8.56

This $8.56 payment from an average acre of farm land is divided as follows

Tax DistrictTax rate / $100
————-Real Property (Land)Amount Due on a $795.01 Acre
School Board0.4560$4.34
County0.2290$1.80
State0.1220$0.97
Health0.0750 $0.60
Library0.0670 $0.53
Extension0.0400 $0.31
————-Tangible PersonalAmount Due ($0 Tangible / Acre)
County1.4180$0
State$49.50$0
————-Current Farmland
Total TaxPayments
———————————–
Local Districts$7.58
State$0.97
All tax rates are 2019 levels

Calculating taxes due on Mason County Solar Acre

Assumptions

$650Annual Solar Lease rate paid to the landowner (net income)/ acre
7%Capitalization rate
$11,000Tangible Personal Property value / solar farm acre
• Above ground transmission power lines/wires/poles and related equipment
• AC switchgears, Meters, Breakers, Control Switches, Regulators
• AC Above Ground & Underground Cables & Connectors
• Security Systems,Communication Equipment
• Computer systems, monitor & control systems and SCADA systems

First determine valuation of solar farm’s real property (land)

KY Dept of Revenue sways valuation of a utility-scale solar acre is determined based on the income approach.

  • The income approach is a real estate valuation method that uses the income the property generates to estimate fair value.
  • It’s calculated by dividing the net operating income by the capitalization rate.
  • $650 / 0.07 = $9,285.71 

Next, we calculate the annual amount due to each tax district

Tax DistrictTax rate / $100
————-Real Property (Land)Amount Due on a $9,285.71 Acre
School Board0.4560$50.70
County0.2290$21.26
State0.1220$11.33
Health0.0750 $6.96
Library0.0670 $6.22
Extension0.0400 $3.71
————-Tangible PersonalAmount Due ($11,000 Tangible / Acre)
County1.4180$155.98
State$49.50$49.50
————-Solar Total Tax
Payments
———————————–
Local Districts$244.84
State $60.83
All tax rates are 2019 levels
Solar-Farm-Assessment-Recommended-Guidelines_2_April-2020


Some may debate Local Tax District Income from Taxes on Tangible Assets

For new economic development, such as solar, Kentucky sometimes negotiates lower tax rates on tangible assets. In addition, because the tangible assets depreciate, tax revenue on tangible assets decreases over time.

This table shows increase revenue even if Mason County Solar projects pay NO local tax on their tangible assets.

This $14 Million increase means local tax districts receive 971% more revenue from these 6,000 acres than if there is no Solar, even with no tax on solar’s tangible assets.