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    Note: The current rules are under revision to make changes related to HB 268, 82nd Legislative Session.


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Agriculture and Timber Industries
Frequently Asked Questions


Horses

1. As a horse owner, do I qualify for an Ag/Timber Number to purchase eligible items tax free?

No. Merely owning a horse does not qualify a person for an Ag/Timber Number. Qualifying persons must produce agricultural products for sale in the regular course of business. The horses themselves and horse feed (including grain, hay and feed supplements) can be purchased tax free without an Ag/Timber Number or issuing an exemption certificate. These items are exempt by law.

2. I breed and sell horses. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

Yes. Persons who breed and sell horses in the regular course of business (including standing studs or using live cover, shipped semen or artificial insemination) qualify for an Ag/Timber Number. Equipment used exclusively on the farm or ranch to produce horses for sale can be purchased tax free.

3. My family does team penning and I rope, but I don't routinely sell my horses. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

No. To qualify, persons must produce horses for sale in the regular course of business. The horses themselves and horse feed (including grain, hay and feed supplements) can be purchased tax free without an Ag/Timber Number.

4. I'm a farrier and start colts on the side. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

No. To qualify, persons must produce horses for sale in the regular course of business.

5. We breed and stand a stud but my wife also shows Western and English. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

Yes. A breeder qualifies as a commercial producer and can get an Ag/Timber Number to purchase equipment tax free used exclusively on their farm or ranch in the production of horses for sale. Tax must be paid, however, on the purchase of saddles, tack and equipment that is taken off the ranch for shows, trail rides, etc.

6. As a horse breeder with an Ag/Timber Number, what can I buy tax free?

Among the items a breeder may buy tax free for use exclusively on your farm or ranch in the production of horses for sale are:

  • fencing, including wire, posts, portable panels and gates;
  • water troughs, automatic waterers, pipe and couplings;
  • feeders, hay racks and block holders;
  • stocks, fly spray and grooming equipment;
  • farrier tools, twitches, balling guns and hand tools;
  • shavings and stall mats;
  • training equipment such as saddles and tack including lunge lines, whips and surcingles;
  • manure carts, spreaders and forks; and
  • tractors, loaders and implements.

The exemption does not apply to items such as barns, office furniture, clothing and computers. See Texas Tax Exemptions for Agriculture for more information.

7. I breed mares at my racing stable hoping to produce foals with high speed indexes. I sell the rest. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

Yes. Producing horses that are sold in the regular course of business qualifies for an Ag/Timber Number, and equipment used exclusively on the breeder's farm or ranch to produce horses for sale can be purchased tax free.

Tax is due on items used off a breeder's farm or ranch (including show and racing saddles and tack) and on items used on the farm/ranch to care for animals not held for sale in the regular course of business.

8. I'm a trainer but I also buy, train and resell performance prospects. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

Yes, because this is considered producing and selling horses in the ordinary course of business. The Comptroller interprets the purchase and training of horses as qualifying production because the training fosters the growth of the horses. Equipment purchased tax free, however, must be used exclusively on a trainer's farm or ranch in the production of horses that are resold.

9. I have a working ranch and sell the cattle I raise. I don't raise horses for sale but I do use them to herd my cattle and ride fences. Can I use my Ag/Timber Number to buy items used on my work horses tax free?

Yes. Commercial cattle ranchers may claim an exemption on equipment used on their ranch in the production of cattle, including items used on their work horses. The exemption applies to items such as ropes, lariats, hotshots, whips, canes, horse tack items, horseshoes, nails, halters and bridles, as long as they are used exclusively on the ranch with the work horses.

These items do not qualify for exemption if they are used in any other manner. For example, a bridle purchased for a horse used to work cattle is exempt, while a bridle for a rodeo, show or race horse is taxable.

10. I board horses for others and use my own horses to give riding lessons and hold trail rides. Do I qualify for an Ag/Timber Number to purchase eligible items tax free?

No. Tax is due on equipment used to care for boarded horses as well as those used for lessons and trail rides. Horse boarding and riding lessons are nontaxable services, while trail rides are taxable as an amusement service. None of those activities qualify as the production of agricultural products for sale.

Providers of nontaxable services and taxable amusement services owe tax on all taxable items used to provide their service. The horses themselves and horse feed (including grain, hay and feed supplements) are not taxable.

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