In January 2013, Congress renewed the enhanced easement incentive through the end of 2013 and retroactve to January 1, 2012. Unless congress acts, it will expire December 31, 2013.
For more information: Land Trust Alliance Enhanced Easement Incentive
The tax benefits were originally signed into law on August 3, 2006 when Congress approved a tremendous expansion of the federal tax incentive for conservation easement donations. This was a great victory for conservation!
The tax incentive has helped America’s land trusts increase the pace of land conservation by at least 535,000 acres compared to the previous two years! The law:
- Raises the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%;
- Allows qualified farmers and ranchers to deduct up to 100% of their AGI; and
- Increases the number of years over which a donor can take deductions from 6 years to 16 years.
These changes enable family farmers, ranchers, and other moderate-income landowners to get a significant tax benefit for donating a conservation easement on their land. Under prior law, an agricultural landowner earning $50,000 a year who donated a conservation easement worth $1 million could take a total of no more than $90,000 in tax deductions! Under the new law, that landowner can take as much as $800,000 in tax deductions – still less than the full value of their donation, but a significant increase.
Learn More at the Land Trust Alliance website.
Sixteen states currently offer tax incentives for conservation. According to the Land Trust Alliance:
The most powerful state incentives for conservation are the transferable tax credits available in Colorado, Georgia, New Mexico, South Carolina and Virginia. Such credits can be sold to an individual or corporation with high tax liability, generating immediate income for the donor. Arkansas, California, Connecticut, Delaware, Iowa, Maryland, Massachusetts, Mississippi, New York, and North Carolina offer some form of non-transferable income tax credit. All but AR, CO, MD, MS and NY apply to some fee-simple land donations as well as conservation easements.
Each state’s program is unique, and qualifying for a federal tax benefit does not automatically qualify a donor for a state benefit. Basic information on the existing state tax credit programs can be found at LTA’s website. You may also find this 2004 chart comparing ten state tax credits a useful resource, although some programs have changed. (Read more)
Read the Conservation Resource Center, State Conservation Tax Credits: Impact and Analysis. It assessed the effectiveness of 12 state income tax credits in advancing land conservation, and provides guidance to other states considering such programs.
The analysis includes:
- detailed examination of state Conservation Credit legislation and supporting regulations
- interviews with land conservation professionals in each of the 12 states having state tax credits