To avert the looming expiration of the enhanced easement incentive, Senate Finance Committee Chairman Max Baucus (D-MT) has introduced the Rural Heritage Conservation Extension Ac
Since 2006, an enhanced income tax deduction for agricultural producers has allowed family farmers, ranchers, and forest land owners to get a significant tax benefit for donating all or part of the value of a conservation easement on their land.
Conservation easements allow private landowners to permanently retire development rights to protect significant natural resources. The enhanced conservation easement tax incentive opened the door to voluntary, landowner-led conservation on millions of acres of important wildlife habitat, farmland, and scenic open space across the country. The incentive also enhances “bargain sales” of easements purchased by local, state and federal conservation agencies.
Donating development rights to land – often a family’s most valuable asset – requires careful planning and consideration. It often takes years from the initial conversations with a landowner before a conservation easement is executed. Landowners considering a perpetual commitment of their land should not be pressured by an artificial deadline, and many will never begin the process without the reassurance of a permanent incentive.
How the Enhanced Easement Incentive Works
The enhanced incentive helps landowners of modest means choose conservation by:
- Raising 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%;
- Allowing qualified farmers and ranchers to deduct up to 100% of their AGI; and
- Increasing the number of years over which a donor can take deductions from 6 to 16 years.
- Without the enhanced easement incentive, 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 enhanced incentive, 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.
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