What is a rollback tax?

A rollback tax is specifically associated with properties that have received an agricultural appraisal and subsequently experience a change in land use. When the use of a property shifts from agricultural to a more intensive use, such as residential or commercial, this typically results in an increase in the property's value. To address this shift, the rollback tax is applied to recover or "roll back" the taxes that would have been owed had the property been assessed at its current market value rather than its agricultural value.

This tax serves as a mechanism to ensure that property owners who benefit from lower agricultural tax rates when using their land for farming or ranching contribute fairly to the local tax base once that property is no longer utilized for such purposes. It acts as a retroactive tax that is assessed for the previous years during which the agriculture exemption was in effect, making it crucial for property owners to understand how changes in land use can impact their tax responsibilities.