When are rollback taxes applied?

Rollback taxes are applied for the year of assessment and the previous two years. This provision is designed to ensure that when property is converted from agricultural or farm use to a non-qualifying use, the taxing authority can recover taxes that would have been paid had the property been assessed at its true market value for those prior years. Essentially, the rollback taxes serve as a penalty for a change in land use, encouraging property owners to maintain their land in agricultural use if possible.

The requirement to consider the current year along with the two preceding years reflects the notion that property values can significantly increase over a short period due to changing land uses, and the rollback tax mechanism allows municipalities to collect taxes that align more closely with the property’s actual value after the use change. This approach helps to preserve the integrity of tax assessments and ensures fairness in taxation, particularly as properties transition to more urban or developed uses.