State and federal tax policies have a huge impact on how much land we’re able to protect.
Tax incentives for land conservation offset part of the loss in property value when a landowner donates an easement, which makes conservation a viable option for more landowners. Tax incentives for voluntary land conservation have proven to help land trusts to protect over 50 million acres nationwide.
Federal Income Tax Benefits
One of the most significant tax incentives is the federal income tax deduction, which Congress made permanent in 2015. This powerful tool allows modest-income donors to receive greater credit for donating a very valuable conservation easement on property they own. With the enhanced incentive in place, the pace of conservation exceeds one million acres per year!
Estate Tax Benefits
Estate tax incentives are another important consideration for many landowners — especially farm and ranch families, who can be hard hit by estate taxes. In some cases, estate taxes force families to subdivide or sell their land. Estate tax incentives for conservation create an alternative, which can help to keep land intact, in production, and in the family. See this page at the Land Trust Alliance for ways conserving your land can help your estate taxes.
State and Local Tax Benefits
Sixteen states offers some form of tax credit for conservation easements, in addition to the federal income tax credit. Iowa is one of those, with a 20-year tax credit for land and easement donations. The incentive is a 50 percent tax credit up to a maximum value of a $200,000 land or easement donation (resulting in a maximum of $100,000 in tax credits) to be utilized up to 20 years.
Sometimes, donating an easement may reduce a landowner’s property taxes. However, that depends on local and state laws where they live. The simplest form of property tax benefit is that a conservation easement usually reduces the value of the property— which may mean that there’s less property tax to pay and in SILT’s case, keeping it zoned as agriculture.