Hawaiʻi County caps property tax increases at 3% for longtime ag-to-home conversions

The Hawaiʻi County Council has adopted an ordinance that limits how quickly property assessments can rise when agricultural land becomes a homeowner parcel, a move designed to blunt sudden tax shocks for long-time residents. Bill 103, introduced by Councilwoman Heather Kimball of District 1 and Councilman James Hustace of District 9, passed unanimously on second and final reading on Jan. 7.

Under the new rule, owner-occupied homes that were taxed at agricultural value for at least 10 of the past 15 years and that qualify for a senior homeowner exemption will carry forward the last agricultural land assessment when they convert to the homeowner class. After conversion, the total assessed value may increase by no more than 3% per year. The measure applies only to primary residences and does not cover vacant land; any new construction or improvements will be assessed at market value.

The ordinance responds to council concerns that some properties receiving agricultural tax breaks were not being actively farmed and that speculation on agricultural land was inflating prices. Councilwoman Heather Kimball said the measure was intended to tighten oversight of agricultural tax programs and curb misuse. "We wanted to ensure that folks that were getting the tax breaks for farming, for doing agriculture, were actually doing farming and agriculture," Kimball said. "It also has a larger intent, to make sure that we don’t have speculation happening on agricultural land, which is one of the things that drives prices up."

Kimball described how the sudden reclassification from agricultural to homeowner status can create dramatic tax increases. "That can have an annual increase of 700%," she said, noting that the shift often translates to about $1,300 to $1,500 more each year in property taxes for affected households. Many of those homeowners are kupuna on fixed incomes, and Kimball warned the sudden jump can produce a "fiscal cliff."

The ordinance is limited in scope and time. It does not provide refunds or retroactive relief for past years and will expire on Dec. 31, 2029. Landowners who are already participating in an agricultural program do not need to take action now. Those who previously left a dedicated agricultural program will need to reapply through the county Real Property Tax Division to regain eligibility under dedicated terms.

These changes build on the council's 2024 overhaul of the agricultural tax dedication program after an audit identified insufficient controls. As part of that overhaul, the council set a September 2026 end date for the county's nondedicated agricultural program; landowners in that program will have to choose either a three-year or a 10-year dedicated program to retain agricultural status going forward. The ordinance also includes a 10- to 15-year lookback to account for owners who temporarily left a program, including during the COVID-19 pandemic.

For Big Island kupuna and long-term residents, the new cap offers a measure of predictability and protection from sudden tax spikes while the county tightens rules meant to preserve genuine agricultural use and limit speculative pressure on rural land. Residents with questions should contact the Real Property Tax Division for information on eligibility and application steps as the county moves to implement the changes.