How the Easement Incentive Works

Thanks to the hard work of Senator Max Baucus (D-MT), along with land trusts and coalition partners around the country, on August 3, 2006 the Congress approved a tremendous expansion of the federal tax incentive for conservation easement donations. This was a great victory for conservation!

In 2006 and 2007 the tax incentive 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.

Conservation Incentive and Solid Tax Reform

The 2006 law also set higher standards for appraisers and appraisals of all donated property, and set higher penalties for abusive appraisals.  Conservationists supported this to ensure the integrity of the charitable donation process.  The law also tightened restrictions on donations of easements to protect historic buildings.  These reforms did not expire at the end of last year.

Current Status and Future Prospects

The enhanced easement incentive expired at the end of 2009, but we believe Congress is likely to renew it before the end of 2010 and make it retroactive to January 1st.  If Congress fails to act, conservation easement donations are still deductible but would be limited to 30% of the donor's adjusted gross income with a 5-year carry-over. C-corporations are limited to 10% of their AGI and, under a separate expired provision, S-corporation shareholders are limited to their basis in donated property. The 2006 appraisal rules do not expire.

Recognizing that this cycle of of hurry-up-and-wait is frustrating to landowners and slows the pace of conservation, Representatives Mike Thompson (D-CA) and Eric Cantor (R-VA) have introduced legislation (H.R. 1831) to make the easement incentive permanent.  That bill has a bipartisan list of 267 cosponsors from all 50 states, including majorities of both parties.

Senators Max Baucus (D-MT) and Charles Grassley (R-IA) have introduced similar legislation in the Senate (S. 812), with 41 cosponsors.

Both President Bush’s FY 2009 budget and President Obama’s FY 2010/2011 budgets support extending the incentive. The Joint Committee on Taxation has scored a permanent easement incentive as costing $761 million over ten years.

Click here for a fact sheet you can use.

Important links:

• How You Can Help Renew the Easement Incentive
• Frequently Asked Questions
• Detailed Information on Tax Regulations Related to Conservation Easements

A Diverse National Coalition

A diverse list of more than 65 national agricultural, conservation, and sportsmen’s organizations support making this important conservation tool permanent:

• American Bird Conservancy
• American Farm Bureau Federation

• American Farmland Trust

• American Fisheries Society

• American Forest Foundation

• American Land Conservancy

• American Quarter Horse Association

• American Sportfishing Association

• Archery Trade Association

• Association of Fish & Wildlife Agencies

• B.A.S.S./ESPN Outdoors

• Berkley Conservation Institute

• Boone & Crockett Club

• Bowhunting Preservation Alliance

• Breeders’ Cup Limited

• California Association of Winegrape Growers

• Campfire Club of America

• Civil War Preservation Trust

• Congressional Sportsmen's Foundation

• Conservation Force

• Defenders of Wildlife

• Delta Waterfowl Foundation

• Ducks Unlimited

• Environmental Defense Fund

• Equine Land Conservation Resource

• Humane Society of the United States

• Humane Society Wildlife Land Trust

• Izaak Walton League of America

• Land Trust Alliance

• Master of Foxhounds Association

• Mule Deer Foundation

• National Audubon Society

• National Cattlemen’s Beef Association

• National Conference of State Historic Preservation Officers

• National Rifle Association

• National Shooting Sports Foundation

• National Trust for Historic Preservation

• National Wild Turkey Federation

• National Wildlife Federation

• National Woodland Owners Association

• NatureServe

• North American Grouse Partnership

• Open Space Institute

• Pacific Forest Trust

• Partnership of Rangeland Trusts

• Pheasants Forever

• Pope & Young Club

• Quail Unlimited

• Quality Deer Management Association

• Rocky Mountain Elk Foundation

• Safari Club International

• Scenic America

• Texas Wildlife Association

• The Conservation Fund

• The Nature Conservancy

• The Trust for Public Land

• The Vital Ground Foundation

• The Wildlife Society

• Theodore Roosevelt Conservation Partnership

• Thoroughbred Owners & Breeders Association

• Trout Unlimited

• United States Equestrian Federation

• U.S. Forest Capital

• Whitetails Unlimited

• Wild Sheep Foundation

• Wildlife Forever

• Wildlife Management Institute

• Winegrape Growers of America