Land-Use Value Assessment Updates

By: Jennifer S. Friedel, Patrick Kayser, Cary Chen, Coren Huff, Valentina Rogers

• Jennifer S. Friedel, Director, Land Use-Value Assessment Program
• Patrick Kayser, Analyst, Land Use-Value Assessment Program
• Cary Chen, Department of Agricultural and Applied Economics, M.S. student
• Coren Huff, LUVA Undergraduate Fellow
• Valentina Rogers, LUVA Undergraduate Fellow

Summary

The Land-Use Value Assessment Program (LUVA) has provided tax relief for qualifying agricultural, horticultural, open space, and forest land for over 50 years by allowing land to be assessed at its use value rather than market value, helping preserve rural land. LUVA at Virginia Tech develops these use-value estimates for the Virginia Department of Taxation using two State Land Evaluation Advisory Council (SLEAC) approved methods, the capitalized rental rate approach and the capitalized income approach, which are reviewed annually by SLEAC.

For Tax Year 2026, SLEAC adopted LUVA’s updated estimates, which show an average statewide decrease of $65 per acre from 2025, bringing the average use-value to $958 per acre. Sixty percent of localities experienced decreases, reflecting recent agricultural challenges such as lower government payments, declining grain prices, and high input costs. While localities are not required to adopt these values, lower use-values can reduce tax burdens and encourage the continued preservation of Virginia’s rural and productive lands.

Introduction

With the aim of preserving rural land, Virginia legislation has enabled localities to provide tax relief to landowners for over 50 years through the Virginia Land-Use Program. Participating localities have the option for qualifying agricultural, horticultural, open space, or forest land to be assessed at the value of its particular use, or ‘use value’, as opposed to market value. Put simply, use value is the net income a farmer could expect to earn from what is grown on their land, excluding livestock and buildings. 

The Land Use Value Assessment Program (LUVA) in the Department of Agricultural and Applied Economics at Virginia Tech is contracted by the Virginia Department of Taxation to develop the use-value estimates of agricultural and horticultural land uses and, more recently, open space use-values. These estimates are presented to and evaluated by SLEAC at its annual meetings. LUVA uses two approaches approved by the State Land Evaluation Advisory Council (SLEAC) to determine use-values: the capitalized cash rental rate approach and the capitalized income approach. 

The Approaches

The capitalized rental rate approach is based on county-level Census of Agriculture data published by the USDA National Agricultural Statistics Service, or NASS, which estimates the dollar per acre landowners are receiving for farmland and pastureland rental. Each jurisdiction's average rental rate is then divided by their respective capitalization rate to give us the use-value. 

The capitalized income approach begins with the creation of a composite farm for each jurisdiction based on the most recent USDA Census data. Then, a per-acre net return on crops is estimated and applied to each jurisdiction’s composite farm. The estimate is then divided by the respective capitalization rate, giving the income approach's use-value estimated as reported to SLEAC.

Implications for Landowners and Localities

Virginia localities are welcome, but not required, to adopt the SLEAC values when determining property assessment values. Land use-values are often lower than fair market values, which protects qualifying landowners from pressures of property tax increases due to development pressures and other factors which may drive an increase in fair market values. The program also allows localities to prioritize and incentivize land uses consistent with the jurisdiction’s desired character. While participation in this program may result in decreased tax revenue for localities, lower property taxes may incentivize landowners to preserve Virginia’s farmland, forestland, and open space as it currently exists — rural and productive. 

Overview of the 2026 Use Values 

In August, Friedel and Kayser, accompanied by LUVA Fellow Coren Huff, presented the Tax Year 2026 use-value estimates to SLEAC in Charlottesville, VA. After a public comment period, these use-value estimates were adopted by SLEAC at its September 2025 meeting for use in 2026.

On average, Virginia’s land use-values decreased by $65 per acre from 2025 to 2026, making the Tax Year 2026 average land use-value $958 per acre. 

• 60 percent of localities experienced a decrease on average in their use-value estimates with 16 percent of localities experiencing a decrease of $49 or less per acre, 13 percent of localities with a decrease of $50-99 per acre, and 31 percent with a decrease of more than $100 per acre.
• 33 percent of localities experienced an increase on average in their use-value estimates with 27 percent of localities experiencing an increase of $49 or less per acre and 6 percent with an increase of $50 or more per acre.
• 7 percent of localities did not experience a change on average in their use-value estimates.

Table 1 provides the district breakdown of average changes in agricultural and horticultural land use-value estimates from 2025 to 2026. 
Type III Land represents the base soil capability class used in the land capability class index. This index is used to adjust use-value estimates based on different land characteristics within a jurisdiction. 

This decrease may reflect several recent trends in the agricultural sector. 2024 was a challenging year for the agricultural sector in the United States, with Virginia being no exception. Direct government payments to farmers have been significantly lower in recent years following relatively substantial ad hoc disaster and pandemic relief payments in earlier years. Since 2022, grain prices have continued to soften, and input price inflation has kept total production costs elevated — impacting the SLEAC use-values as determined by the income approach. 

Graph 1 illustrates how corn and soybean prices have fallen in the last few years despite stable yield values.

Source: USDA NASS (State-Level Prices and Yields, https://quickstats.nass.usda.gov/)

The values presented by Kayser and Friedel were approved by SLEAC and can be found at https://luva.aaec.vt.edu/estimates/. The LUVA team at Virginia Tech continues to work on a variety of projects, each aiming to provide resources like these to both Virginia landowners and policymakers alike.

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The Campus to Commonwealth (CC) article series highlights the Virginia Tech Department of Agricultural and Applied Economics' mission in generating and sharing knowledge in applied economics and agribusiness principles that help address the food, financial, health, development, policy, environmental, and social needs in Virginia and beyond.

John Bovay is the managing editor, and Melissa Vidmar is the production editor.