An Important Tax Benefit: Enhanced Easement Incentive

U.S. Congress recently renewed the Enhanced Easement Incentive that enables landowners and family farmers to get a significant federal tax benefit for donating a conservation easement on their land. This renewed incentive raises the income deduction, increases deductions for farmers and extends the time period for landowners taking this deduction.

This invaluable conservation tool has helped Catawba Lands Conservancy work with willing landowners to protect hundreds of acres of land since it was first enacted in 2006. This incentive was recently made permanent at the end of 2015.

Generous landowners who donate voluntary conservation easements to CLC are inspired by many things: they love our Southern Piedmont home, they feel connected to their land, and they wish to leave a legacy for future generations.

This inspiration is central to our work to permanently protect valuable natural resources. But for many of our land donors, donating a conservation easement is a major financial decision, and the federal income tax deduction that comes with a donation helps make easements possible for landowners in our community.

The legislation allows easement donors to:

• Raises the deduction – Deduct up to 50% of their adjusted gross income in any year (up from 30%);
• Increases deductions for farmers and ranchers – Deduct up to 100% of their adjusted gross income if the majority of that income came from farming, ranching or forestry; and
• Extends the time period for taking deductions – Continue to take deductions for as long as 16 years (previously 6 years).

Why is this incentive so important? The incentive is particularly helpful for moderate income tax payers and qualified farmers, landowners and ranchers. For example, under prior law a landowner earning $50,000 a year who donated a conservation easement worth $400,000 could take a total of no more than $90,000 in tax deductions. Under the current law, the landowner’s cumulative deductions would total $400,000. An agricultural landowner earning $50,000 a year who donated a conservation easement worth $800,000 could take a total of no more than $300,000 in tax deductions under the prior law. Under the new law, the agricultural landowner can take as much as $800,000 in tax deductions.

Efforts will continue on the state and national level to encourage legislation to make the enhanced incentive permanent. We’ll keep you posted on these efforts and CLC’s role. If you’d like to learn more about donating land or a conservation easement, please contact Matt Covington, land acquisition director for CLC, at 704-342-3330, ext. 212 or matt@catawbalands.org.