State and Local Tax Incentives

Individuals who donate land or easements for conservation often qualify for a federal tax deduction. In addition, in 16 states these donors may also qualify for state tax incentives.

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 below. You may also find this 2004 chart comparing ten state tax credits a useful resource.

The list of states with tax incentives is expanding - the Arkansas, Florida, Iowa and Massachusetts incentives described below were added in the past year!

Local, State and Federal Incentives for Conservation Easements

Former South Carolina Director of Revenue, Burnet Maybank, has published an excellent resource on tax incentives for conservation. It focuses on South Carolina law, but will be useful to anyone interested in conservation tax incentives.(posted 7/21/2006) View the PDF

If you have information on a pending credit, or would like to update the information below, please e-mail policy@lta.org.

Arkansas | California | Colorado | Connecticut | Delaware | Florida | Georgia | Iowa | Maryland | Massachusetts | Mississippi | New Mexico | New York | North Carolina | South Carolina | Virginia

Arkansas

In early 2009, the Arkansas legislature expanded the Wetland and Riparian Zones Tax Credit Program to allow credits for the donation of conservation easements in wetland and riparian zones.  Easement donors in these areas may qualify for an income tax credit for 50% of the easement's appraised value, up to $50,000.  While these credits are not transferable, remaining amounts may be carried forward for up to 9 years. Unfortunately the entire tax credit program is capped at $500,000, but supporters are hopeful that getting their foot in the door will pave the way for future expansion.

Learn More:

• Read the Full text of Act 351 of 2009.
• See the Wetland and Riparian Zones Tax Credit Program website, which will be updated with information about the new easement tax credit when rules are written.

California

The Natural Heritage Preservation Tax Credit Act offers incentives to preserve wildlife and plant habitat, agricultural lands, open spaces, and water rights on private lands. Landowners, including pass-through entities who donate land, an easement, or water rights are eligible for the credit. Eligible donations must meet the goals of a conservation plan, protect species or habitat, conserve threatened agricultural land, or increase public access to open space or archaeological resources. The tax credits are managed by the state resource agencies and essentially "granted" to landowners. Donors are allowed an income tax credit of 55% of the fair market value of the donated property against their income, with an eight-year carry-forward period. The tax credit program was suspended in 2002, but reinstated in 2005. Under the reinstated program, the state resource agencies and departments have to provide funds to the state's general fund to replace any tax credit claimed by a landowner. Please see the links below for details on the current status. The California conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• Read application information for the Natural Heritage Preservation Tax Credit.
• See the California Council of Land Trusts website for more details.
• See the text of the California law.

Colorado

A conservation tax credit is available to Colorado residents, corporations, estates, and trusts who donate a conservation easement. For easements worth less than $100,000, the credit is worth 100% of the fair market value of the easement. For easements of greater value, the credit is worth $100,000 plus 40% of the easements value above $100,000. The maximum credit that can be claimed is $260,000. An unused credit can be carried forward for 20 years. This law was recently amended and the new legislation will take effect January 1st, 2007. It will replace the two-tiered tax credit structure with a single-tier in which 50% of the charitable donation can be claimed as a tax credit, up to a maximum credit of $375,000. A taxpayer can also sell all or part of a credit to a "transferee.” More information on transferring tax credits in Colorado.

Learn More:

• See link for details on Colorado’s conservation easement credit statute.
• For additional facts, see the Colorado Cattlemen’s Agricultural Land Trust.
• Explore the Tax Credit Connection’s FAQ’s on the Credit.
• Learn more about transferring state tax credits in Colorado from the Conservation Resource Center

Connecticut

Connecticut provides a state corporate income tax credit for donations of conservation land or easements equal to 50% of the donation's fair market value. A 10-year carry forward period is available to donors whom do not use up the entire credit in the year of its origination. Donated land or easements must a) conserve natural or scenic resources, b) protect natural streams or water supplies, c) conserve of soils, wetlands, beaches, or tidal marshes, d) enhance neighborhood parks, forests, wildlife preserves, nature reservations, or other open space, e) enhance public, recreation opportunities, or f) preserve historic sites. The Connecticut conservation easement tax credit is non-transferable and applies in addition to federal tax benefit.

Learn More:

• See form 1120DL to claim the Connecticut credit.

Delaware

Delaware provides a tax incentives to individuals or corporations that donate land or conservation easements. The credit is equal to 40% of the fair market value of the donation with a maximum credit of $50,000 for individuals per year. A 5-year carry forward period is available to individuals whom do not use up the entire credit in the year of its origination. Delaware conservation donations aim to conserve open space, natural habitat, recreational properties, resource conservation, and historic properties. The Delaware conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• See the text of the Delaware law.
• For more information visit Delaware Preservation, Inc.

Florida

Florida has no state income tax, so in November 2008, Florida voters took the innovative approach of exempting land under easement from all state property tax, passing Amendment 4 by an overwhelming margin.  The law has two parts -- the first provides for a tax exemption for properties with a perpetual conservation easement.  The second provides for a "conservation assessment" on land that is in conservation use. The legislature is currently considering implementing legislation, which is required to be in place for the tax year beginning in January, 2010.

The permanent conservation easement portion includes requirements that mirror what land trusts already do in compliance with IRS rules and land trust standards and practices.  The bill does require that properties be at least 40 acres, unless they have special environmental features or are located next to protected areas, and excludes one acre around homes and buildings.  The second section allows for voluntary ten year covenants to restrict development rights.  There is a re-capture mechanism for back taxes when the land is taken out of conservation, but the rules for this are not spelled out, and will be developed by the Department of Revenue.

Learn More:

• Visit the campaign website for Amendment 4.
• See a draft version of implementing legislation, Senate Bill 2244.

Georgia

Georgia provides a state tax credit to individuals and corporations donating land or easements for conservation. The tax credit allows taxpayers to claim a credit against their state income tax liability of 25 percent of the fair market value of the donated property interest, up to a maximum credit of $250,000 for individuals and $500,000 for corporations. The allowed tax credit may not exceed the amount of tax owed for the taxable year, but any unused portion of the tax credit may be carried forward for the next five years. The Georgia conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• See the text of the Georgia law.
• Additional details on the credit.

Iowa

Thanks to new legislation passed in 2008, Iowa taxpayers can now claim a substantial Iowa tax credit for donations of land or conservation easements.  Donors may receive 50% of the fair market value of the donated property interest up to a maximum tax credit of $100,000. These credits are not transferable, but any remaining value may be carried forward over a total of 20 years!  Iowa Natural Heritage Foundation (INHF) was part of a team of conservation interests that pitched their state tax credit to legislators and encouraged its adoption. “We really appreciate the work of so many lawmakers who understood that conservation budgets could not keep pace with land inflation, so they supported this innovative tax policy to encourage more voluntary land protection,” said INHF Public Policy Director Duane Sand.

Learn More:

• Read an article on the new tax credit in the Fall 2008 Iowa Natural Heritage Foundation Magazine.
• See Iowa Natural Heritage Foundation's guide for landowners which includes a wealth of links including legislative text.

Maryland

Maryland income tax payers who donate a conservation easement (not land in fee) may be eligible for a conservation tax credit. Easement donors qualifying for the State Income Tax Credit can deduct up to $5,000 per year with a 15 year carry forward period. Easements must be held or co-held by the Maryland Environmental Trust or the Maryland Agricultural Land Preservation Foundation, and approved by the Board of Public Works. In addition, easement donors may also qualify for the Conservation Property Tax Credit if their easement protects unimproved, non-commercial land. This credit is worth 100% of the property tax paid on the eased land. The Maryland conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• Learn more about the State Income Tax Credit from the Maryland Environmental Trust.
• See the official application form for the Conservation Property Tax Credit.
• For more information view the Eastern Shore Land Conservancy tax benefits information.

Massachusetts

In January 2009, Massachusetts enacted a new state tax credit for donors of land or easements. Donors may receive 50% of the fair market value of the donated property interest up to a maximum tax credit of $50,000. These credits are not transferable, but any remaining value may be carried forward for up to 10 years. Unfortunately, the entire program is currently capped at $2 million per year. The new credit enters into effect January 1, 2011.

Learn More:

• See the final bill text.
• Read the Nature Conservancy Press Release on the new Massachusetts tax credit

Mississippi

Mississippi appears to have two, small, narrowly focused tax credits for conservation:

H.B. 701 of 2003 offers a non-transferable credit toward 50% of allowable transaction costs associated with donating an easement on "Lands to protect stream bank habitats and  stability and to protect high biodiversity sites with exemplary natural communities or species of special concern or endangered species." The credit is capped at $10,000 and may be carried forward for 10 years.

A second credit was enacted in April 2010 with the passage of H.B. 1716. It appears to provide a credit of $5.50 per acre, per year, for certain lands made avialable for habitat or recreational purposes.  Information about the new credit is still limited.

Learn More:

• See the text of the 2003 tax credit for transaction costs

New Mexico

The Land Conservation Incentives Act of New Mexico offers a tax credit of up to $100,000 per year to anyone donating a qualified fee interest or conservation easement to an open space program or environmental organization or government entity. The credit is for 50% of the fair market value of the land and may be carried forward for twenty successive years. Qualifying land or easements must be donated for natural resource, open-space or biodiversity conservation, or agricultural, watershed or historic preservation (note: this is different from the federal tax code specification). The New Mexico conservation easement tax credit was recently improved by making it transferable and applies in addition to federal tax benefits.

Learn More

• Visit The Nature Conservancy website for additional details on the credit.
• Visit the Tax Credit Connection for information about these newly transferable credits.

New York

Beginning in 2007, this innovative credit will give New York State landowners whose land is restricted by a conservation easement income tax credit. The landowner's state income tax will be reduced by 25% of the property tax paid on the eased property, up to $5,000. It is available to all owners of easement-restricted land, regardless of when the easement was created, provided that the easement was wholly or partially donated to a land trust or a governmental agency. The New York conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• See more details on the New York State tax credit.

North Carolina

The North Carolina Conservation Tax Credit Program provides an income tax credit to some land easement donors. Land or easement donations must provide public access to land or water, fish and wildlife conservation, or fulfill other land conservation purposes (note: this is different from the federal tax code specification). The credit is worth 25% of the fair market value of the donation with a total credit of $250,000 for individuals and $500,000 for corporations. Any unused portion of the credit may be carried forward for five succeeding years. Credit taken in any year may not exceed the amount of income tax imposed by the state, reduced by the sum of all other credits. The North Carolina conservation easement tax credit is non-transferable and applies in addition to federal tax benefits.

Learn More:

• See the North Carolina Department of Environmental and Natural Resources for more details on the credit.
• See the text of the North Carolina law for corporations.
• See the text of the North Carolina law for individuals.
• See the Carolina Mountain Land Conservancy for FAQs on North Carolina’s conservation easements

South Carolina

The amended section of the 1976 code requires that a landowner has qualified for and claimed on their federal income tax return a charitable deduction for a gift of land for conservation, or for a qualified conservation contribution, to be eligible for the state income tax credit. South Carolina’s tax incentive comes in the form of a tax credit equal to 25% of the fair market value of the conservation gift. The tax credit is limited to a maximum of $52,500 per year, and to $250 per acre. The South Carolina tax incentive allows the landowner to carry the unused portion of the credit forward indefinitely until the full credit is claimed. The South Carolina conservation easement tax credit applies in addition to federal tax benefits.

Learn More:

• Detailed information on Local, State and Federal Tax Incentives in South Carolina is available from the Department of Revenue (PDF).
• Explore resources from the Open Space Protection Collaborative.
• Learn about buying and selling credits from the South Carolina Conservation Credit Exchange.
• See the text of the South Carolina law - scroll down to section 12-6-3515.

Virginia

Under the Virginia Land Conservation Act of 1999, every landowner who donates land or an easement for conservation is entitled to a credit against state income tax. The credit is worth 40% of the easement’s fair market value, up to $100,000 per year. Virginia’s income tax credit is available to tax-payers who donated a conservation easement after January 1, 2000. This tax credit applies to any person, corporation, partnership, organization, trust or estate subject to state or local taxation. If the credit is not used up in the year of the easement donation, it can be carried forward for an additional five years. Furthermore, if the easement was donated after 2001, the credit may be sold or transferred to other Virginia taxpayers. Individuals and corporations in the state of Virginia may buy or sell conservation tax credits, as long as a notification of the transfer of the credit is sent to the tax commissioner. For 2009 and 2010, the Legislature reduced the cap from $100k to $50k, but since the credits are transferable a donor should still be able to claim full credit--they may just have to transfer credits to more separate taxpayers.

Learn More:

• Read the Virginia Department of Taxation’s synopsis of the state tax credit program.
• See information from the Virginia Outdoors Foundation.
• Explore the Piedmont Environmental Council’s info center (including FAQ) on the credit.
• See the text of the Virginia law.

If you have information on a pending credit, or would like to update the information above, please e-mail policy@lta.org.