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STATE TAX CREDITS


Many States provide state income tax credits or other tax credits based on certain rules and eligibility requirements when certain conservation projects meet certain purposes or when a conservation easement is placed on land in that state that qualifies subject to other eligibility requirements. Currently, we are aware of 16 States that offer some type of tax credit relating to conservation purposes or conservation easements to qualified applicants that meet certain requirements. Conservation Easement Advisors, LLC can help you determine if your project or property might qualify for state tax credits.
 

ARKANSAS STATE TAX CREDITS


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.



CALIFORNIA STATE TAX CREDITS


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.


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COLORADO STATE TAX CREDITS


A conservation tax credit is available to Colorado residents, corporations, estates, and trusts who donate a conservation easement. Since 2007, the credit has been valued at 50% of the fair market value of the easement, up to a maximum credit of $375,000. A taxpayer can also sell all or part of a credit to a "transferee.” In recent years, Colorado land trusts have worked with the state legislature to craft additional reforms that ensure the integrity of the program and address budgetary concerns without permanently restricting its size.


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CONNECTICUT STATE TAX CREDITS


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.


 

DELAWARE STATE TAX CREDITS


Delaware provides 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.


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FLORIDA STATE TAX CREDITS


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 recently enacted implementing legislation.

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.


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GEORGIA STATE TAX CREDITS


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. In Spring 2011 the Georgia tax credit was amended to make it transferable.


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IOWA STATE TAX CREDITS


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.


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MARYLAND STATE TAX CREDITS


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.


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MASSACHUSETTS STATE TAX CREDITS


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.


 

MISSISSIPPI STATE TAX CREDITS


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 available for habitat or recreational purposes.  Information about the new credit is still limited.


 

NEW MEXICO STATE TAX CREDITS


The Land Conservation Incentives Act of New Mexico offers a tax credit of up to $250,000 per year to anyone donating a qualified fee interest or conservation easement to any 501(c)3 organization or government entity. The credit is for 50% of the fair market value of the appraised value of the land or easement and may be carried forward for twenty successive years. In addition, the credit is transferable, meaning that a qualifying applicant for the credit can sell it on the open market at a discounted rate.  Qualifying land or easements must be donated for preservation of relatively natural habitat, open space, agricultural lands, outdoor recreation or education for the benefit of the general public, and/or historically important structures or land areas.


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NEW YORK STATE TAX CREDITS


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, but is refundable and applies in addition to federal tax benefits.


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NORTH CAROLINA STATE TAX CREDITS


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.


 

SOUTH CAROLINA STATE TAX CREDITS


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.


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VIRGINIA STATE TAX CREDITS


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.


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