Agricultural Tax Status and Rollback Taxes When Farmland Is Developed

Property tax is normally based on market value: what a willing buyer would pay. Near a growing metro area or a transmission corridor, that value reflects development potential, not farm income. To keep farming viable, nearly all states offer farmland an assessment below market value, usually based on what the land can earn in agricultural production.¹ Programs go by different names: land use assessment in Virginia, Clean and Green in Pennsylvania, present-use value in North Carolina, CAUV in Ohio, Greenbelt in Tennessee, conservation use in Georgia and agricultural or open-space appraisal in Texas.

The gap can be large. Land zoned for farming and valued on crop income may be assessed at a small fraction of what a data center developer would pay for it. The tax break is the difference between the two, and most programs treat it as conditional: the owner keeps it only while the land stays in qualifying use. Researchers at the Lincoln Institute of Land Policy note that a program without a development penalty does little to slow conversion of rural land at the metropolitan edge, which is why most states attach one.¹

There are three broad ways states recover the break when land leaves the program. Our broader guide to converting farmland to a data center covers zoning, farm leases and drainage; this guide focuses on the tax.

The trigger matters more than the amount, because it decides when the bill arrives and who owes it. A sale alone does not always trigger rollback. What usually does is a change of use, and states define that differently.

• Change of use. In every program reviewed here, converting the land to a nonqualifying use, such as commercial development, ends eligibility.⁴⁶
• Rezoning. In Virginia, land in the program owes rollback when its zoning is changed to a more intensive use at the request of the owner or the owner’s agent, even if farming continues.⁴
• Platting or ceasing farm use. Texas appraisal guidance lists diverting land to a commercial use or platting it into a subdivision as changes of use, and the tax is imposed on the date the change occurs.⁶
• Failing to stay enrolled. In Ohio, an owner who does not renew CAUV has the land valued at market and the prior three years recouped.⁹
• Sale to a nonqualifying buyer. Gwinnett County, Georgia, lists selling to a developer, or to someone who would not qualify, as a breach of a CUVA covenant.⁸

For a data center deal, those triggers line up with ordinary deal milestones. The option agreement itself rarely changes anything. The rezoning application, the plat and the end of farming often do. Our guide to subdivision and platting explains why plats come early on large campuses.

The core formula is the same almost everywhere: for each look-back year, take the tax that would have been levied at fair market value, subtract the tax actually levied at use value, and add the years together.⁴ The variables are the number of years, the interest and how much of the parcel is charged.

• Look-back. Virginia uses the five most recent complete tax years, unless the locality has adopted a sliding-scale ordinance, and also taxes the current year at market value.⁴ North Carolina bills the year of disqualification plus the three previous years.¹⁰
• Interest. Virginia lets the governing body set simple interest no higher than its delinquent-tax rate; Loudoun County charges five-sixths of 1% per month.⁴¹¹ Texas removed its 5% rollback interest in 2021 for open-space land, so only the tax itself is recovered.⁶¹³ North Carolina accrues interest as if each year’s tax had been due on time.¹⁰
• Area. Virginia assesses rollback only on the portion that no longer qualifies.⁴ Pennsylvania county guidance says Clean and Green rollback is imposed on the entire portion of land enrolled under the application, which can make a small split-off expensive.¹² Pennsylvania adds 6% interest per year; state guidance describes it as simple interest, though at least one county describes it as compounded, so confirm with the county assessor.³¹²

Because market value is the input, the bill grows with the land’s development value. Assessors base it on the market value each year, so land that was already valued as data center land in the look-back years produces a larger rollback than land valued as rural acreage.

In that example, the owner who saved about $94,000 over five years repays about $122,000. The real numbers depend on the assessor’s market values and the local rate, so ask the assessor for an estimate before negotiating; Tennessee county offices, for example, will provide one.²

The six states below all have active data center markets and preferential farm programs. Rules change, so confirm the current statute before relying on any row.

Georgia works differently. Conservation use valuation requires a 10-year covenant, and a landowner who breaks it early must repay twice the savings received, plus interest.⁷ Gwinnett County lists a sale to a developer as a breach, and notes that a buyer’s continuation of the covenant is not automatic: the Board of Assessors reviews it.⁸

Most statutes point at the person whose action caused the change, and the unpaid tax is typically a lien on the land. Tennessee makes the seller responsible for rollback and the current year’s regular taxes when a sale disqualifies the land, unless a written contract provides otherwise, and lets the parties prorate at closing.² When land is taken by eminent domain in Tennessee, the taking body is liable instead.²

The lien is why buyers care even when the statute names the seller. Unpaid rollback stays with the land, and title companies will look for it. In practice the purchase and sale agreement should answer three questions:

1. 01Who pays rollback caused by the buyer’s rezoning, platting or other entitlement applications, whether or not the deal closes.
2. 02Who pays rollback caused by the seller’s own change of use before closing, such as ending a farm lease early.
3. 03Who pays the higher regular taxes that follow a rezoning if the deal is terminated before closing.

Developers commonly agree to cover rollback their own applications cause, because the owner would not otherwise face it. Owners should still read the clause closely, since a reimbursement promise is only as good as the developer entity behind it. Our guides to option agreement terms and data center interest in farm and ranch land cover the wider negotiation. Confirm allocation with a real estate attorney.

Data center land deals often run for years between option and closing, and that is where rollback surprises happen. The clearest example is the Prince William Digital Gateway in Virginia. The county rezoned more than 1,700 acres for data centers in December 2023, and landowners whose sales had not closed sued over the resulting tax bills. In December 2024 a circuit judge ruled for the county, holding that the land counted as rezoned for tax purposes even though the developers had not yet bought it.⁵ The rezonings themselves did not survive: a circuit court voided them over defective public notice, the Court of Appeals of Virginia affirmed on March 31, 2026,¹⁴ and QTS later dropped its appeal to the Supreme Court of Virginia, ending the project.¹⁵ Owners in that position should ask counsel and the county how a voided rezoning affects rollback already billed.

Three practical lessons follow:

• Keep farming where the law allows. Land held for future or phased development can often stay in a farm program while it is actively farmed, with rollback following only when the farm use ends. Ohio allows land to lie fallow for one year and stay in CAUV, with good cause needed in later years.⁹
• Phase the conversion. In states that charge only the converted portion, taking land out of the program phase by phase keeps the remainder enrolled.⁴
• Know the appeal route. North Carolina’s Court of Appeals held in 2025 that disqualification from present-use value is not a reappraisal but notice that deferred taxes are due, which affects how and when an owner can contest it.¹⁶

Rollback also interacts with the much larger tax bill that follows development. Once the campus is built, buildings and equipment dominate the tax base, as our guide to property taxes on data center projects explains, and rollback becomes a one-time closing cost by comparison.

1. 01Confirm whether the parcel is enrolled, in which program, and since when. The enrollment date can cap the look-back.¹²
2. 02Ask the assessor or appraisal district for a written rollback estimate at current market value and the local interest rate.²
3. 03Identify the trigger in your state: change of use, rezoning, platting, sale or nonrenewal.
4. 04Check for covenants or recorded restrictions, such as Georgia CUVA covenants or conservation easements, that carry separate penalties.⁷
5. 05Write rollback, reassessment and lien payoff responsibility into the contract, with survival past closing or termination.
6. 06Report any change in use to the assessor promptly and accurately, and keep the farm lease and production records that support continued enrollment.

Rollback rarely decides whether a site works, but it can change the net price of a deal and the timing of a rezoning. Use our due diligence checklists and tools to line it up with power and zoning screens, and get a site reviewed when you want the whole picture. Confirm the tax treatment of a specific parcel with the assessor and a tax adviser.