Texas Ag Exemption: 1-d vs 1-d-1 Valuation Explained for Landowners

You have two paths to Texas agricultural property tax valuation, and they are not interchangeable. They come from different amendments to the Texas Constitution, follow different sets of Tax Code sections, use different forms, and carry different rollback penalties. Pick the wrong one and you either cannot apply or you face a liability you did not expect.

The older path, Section 1-d, applies only to individuals whose primary income comes from farming. The newer path, Section 1-d-1, applies to anyone whose land is used for agriculture to a degree typical for the area, regardless of who owns it or whether farming is their main job. For 95 percent of Texas landowners, 1-d-1 is the only option on the table, and it is almost certainly what you want.

Why Texas Has Two Agricultural Valuation Systems

Texas did not create one system then expand it. The state added a second constitutional amendment 12 years later because the first one was too narrow.

Section 1-d was added to Article VIII of the Texas Constitution in 1966. It taxes qualifying farm and ranch land at its productivity value instead of market value. But it came with a strict limit: only individuals whose primary occupation and primary source of income is farming could use it. A lawyer who runs cattle part-time, a corporation that owns a ranch, or an LLC that leases land to a tenant all fell outside the rule.

In 1978, Texas voters approved a second amendment, adding Section 1-d-1. This one covers open-space land devoted principally to agricultural use at the degree of intensity generally accepted in the area, with no requirement that farming be the owner's primary business or income source. It also allows individuals, corporations, partnerships, and trusts to qualify, which matters because most Texas rural land is now held by entities.

The difference is not academic. It determines whether you can apply at all, which form you file, how often you reapply, and what happens when you sell or change use.

The Core Difference in One Table

The four qualifications that matter most to a landowner are ownership structure, income requirement, use-history duration, and annual reapplication. Here is how the two systems differ across each one.

The ownership and income restrictions make 1-d inaccessible to most Texas landowners. If you are a retiree running a few head of cattle on your 20-acre weekend place, you fall outside 1-d because farming is not your primary occupation. If your land is in an LLC for liability protection or estate planning, 1-d is not an option at all. That is why county appraisal districts process far more 1-d-1 applications than 1-d applications.

Who Should Use Each System

If you are a full-time farmer or rancher who files Schedule F with the IRS and whose livelihood comes from the land, 1-d may be worth considering. It requires only three years of qualifying use instead of five, and the annual reapplication acts almost like an audit that keeps your operation in focus. But the trade-off is sharp: you must reapply every year, and the ownership restriction means you cannot hold the land through an entity.

For everyone else, 1-d-1 is the path. A part-time rancher, an absentee landowner who leases to a tenant, or any land held by a corporation, LLC, or trust cannot use 1-d. This covers the vast majority of Texas rural landowners.

The key requirement for 1-d-1 is that the land is currently devoted principally to agricultural use to the degree of intensity generally accepted in the area, and that it has been in qualifying use for five of the preceding seven years. That history transfers with the land. If the previous owner had 1-d-1 status and the use continues, you can apply in your name and the clock does not reset. For the full list of qualifying activities, see our agricultural exemption overview. For the related open-space versus agricultural valuation distinction, read our comparison guide.

What Happens When You Sell

This is where the two systems diverge in a way that can cost you money.

Under 1-d-1, a sale alone does not trigger a rollback. The rollback only applies when the land changes to a non-agricultural use, under Tax Code Section 23.55. If you sell to a buyer who continues the cattle operation or the hay farming, the 1-d-1 valuation continues without interruption and no rollback tax is owed. The liability follows the change of use, not the change of ownership.

Under 1-d, both a sale and a change of use trigger the rollback. Tax Code Section 23.46(c) imposes the additional tax when the land is sold or diverted to non-agricultural use, for the three preceding years. The same sale that causes no problem under 1-d-1 can create a bill under 1-d. For the full rollback calculation, see our rollback tax guide.

There is one more consideration. HB 1244, effective January 1, 2026, clarified that a transfer of 1-d-1 land to a new owner who runs the same operation is not treated as a change of use. This means a parent transferring land to a child who keeps the cattle on the property, or a seller transferring to a buyer who retains the tenant, can maintain the valuation without a new five-year history. The law also provides a one-year late-filing window for the new owner to update the application.

Rollback Interest and Penalties

The interest treatment is one area where landowners get confused, and for good reason. The two systems reference different statutes with different rules.

Under 1-d-1 and timber valuation (Tax Code Section 23.76), no interest applies to the rollback tax. HB 3833 from the 87th Legislature, effective June 15, 2021, removed the interest clause entirely from Sections 23.55 and 23.76. The rollback is simply the difference between taxes paid at productivity value and taxes that would have been paid at market value, for each of the three preceding years.

Under 1-d (Tax Code Section 23.46(c)), interest does apply, and it tracks the delinquent tax rate. The statute says the additional tax is imposed "plus interest at the rate provided for delinquent taxes." That rate is not a flat percentage. It is set annually by the Texas Comptroller and compounds monthly. This means a 1-d rollback can grow significantly larger than a 1-d-1 rollback for the same property, because the interest component is live and compounding rather than eliminated.

The rollback lookback period is the same for both: three years preceding the year of the change, with the change-of-use year itself excluded.

How to Apply

If you are new to agricultural valuation, start here.

For 1-d-1 (open-space):

1. Confirm your land meets the five-of-seven-year use history requirement. If the previous owner had the valuation, this history likely transfers to you.
2. Verify that your land is currently devoted principally to a qualifying agricultural use to the degree of intensity generally accepted in your area. This means a real operation, not a hobby.
3. Complete Form 50-129, the Application for 1-d-1 (Open-Space) Agricultural Use Appraisal.
4. File it with your county appraisal district before May 1 (April 30 is the practical deadline). A late application is accepted until the appraisal review board approves the records, but it costs a 10 percent penalty on the tax savings for that year.
5. Once approved, you do not need to reapply annually unless the ownership or use changes, or the chief appraiser requests confirmation.

For 1-d (agricultural use):

1. Confirm you are an individual and that agriculture is your primary occupation and primary source of income.
2. Verify three years of agricultural use immediately preceding the claim.
3. Complete Form 50-165, Application for 1-d Agricultural Appraisal.
4. File it annually before May 1. Missing the deadline means you lose the valuation for that entire year.
5. The application requires a sworn statement each year, so expect the appraisal district to request updated information annually.

The forms are not interchangeable. Filing Form 50-129 when you need 50-165, or vice versa, will delay your application or get it returned. Download the correct form from the Texas Comptroller website.

Choosing Between Them

Most landowners do not need to deliberate. If farming is not your primary job, or your land is held by an entity, 1-d-1 is your only option. The question becomes relevant when you are a full-time farmer or rancher who owns the land personally and wants to decide between the two programs.

In that situation, consider the trade-offs. 1-d requires less use history (three years versus five) and the annual reapplication keeps your operation visible to the district. But it demands that agriculture be your primary income source, restricts you to individual ownership, and imposes a rollback on every sale. 1-d-1 requires five years of history, but once approved, it does not require annual reapplication, it works with entity ownership, and a sale alone does not trigger rollback.

For landowners who plan to hold the property long-term and keep farming, 1-d-1 is almost always the better choice. The five-year history requirement is a one-time hurdle, and the protection at sale is worth more than the annual paperwork burden of 1-d.

Where to Go Next

If you are ready to apply, find your county appraisal district contact information on our county pages. Each district has its own intensity standards, productivity values, and site-visit procedures, and confirming those before you file saves weeks of back-and-forth.

For the complete picture on how agricultural valuation works in Texas including the productivity-value formula, common qualifying uses, and the rollback penalty calculation, read our complete 2026 ag exemption guide. For a walkthrough of the application process, see how to get an ag exemption in Texas. If you are a new landowner, our first-year strategy guide walks through the filing sequence month by month. You can also browse our exemptions overview for a comparison of agricultural, wildlife, timber, and beekeeping valuations.

Sources

This article reflects Texas law as of September 14, 2026, including HB 3833 (87th Legislature, effective June 15, 2021) and HB 1244 (89th Legislature, effective January 1, 2026).

• Texas Constitution Article VIII, Section 1-d - the constitutional amendment added in 1966 authorizing agricultural use appraisal for individuals whose primary income is from farming
• Texas Constitution Article VIII, Section 1-d-1 - the constitutional amendment added in 1978 authorizing open-space agricultural appraisal for any owner
• Texas Tax Code Section 23.41 through 23.48 - Subchapter C, agricultural land (1-d), including the annual reapplication requirement and the rollback-and-interest penalty on sale under Section 23.46(c)
• Texas Tax Code Section 23.51 through 23.60 - Subchapter D, open-space land (1-d-1), including the five-of-seven-year history test and the change-of-use rollback under Section 23.55
• Texas Tax Code Section 23.46(c) - additional taxation on 1-d land, including interest at the delinquent tax rate on sale or change of use
• Texas Tax Code Section 23.55 - change of use of 1-d-1 land, three-year rollback period with no interest
• Texas Tax Code Section 23.54 - application requirements and the before-May-1 filing deadline
• HB 1743 (86th Legislature) - reduced the 1-d-1 rollback from five years to three years, effective September 1, 2019
• HB 3833 (87th Legislature) - eliminated rollback interest on 1-d-1 and timber land, effective June 15, 2021
• HB 1244 (89th Legislature) - ownership transfer continuity rules and one-year late-filing window for 1-d-1, effective January 1, 2026
• Form 50-129, Application for 1-d-1 (Open-Space) Agricultural Use Appraisal - the form for 1-d-1 applications
• Form 50-165, Application for 1-d Agricultural Appraisal - the form for 1-d applications
• Manual for the Appraisal of Agricultural Land - the Comptroller's methodology guide for both 1-d and 1-d-1 land

Verified September 14, 2026. County-specific productivity values, intensity standards, and acreage minimums are set locally by each appraisal district and change annually, so confirm current figures with your district before filing.