The Internal Revenue Service (IRS) allows voluntary tax deductions for private landowners implementing conservation actions that contribute to the recovery of threatened and endangered species. It was conceptualized by Wildlife Mississippi.
Type of lands that qualify: Cropland, wetland, grassland, forestland
Type of program: Incentive
Monetary benefit: Tax deduction
How it Works
The 2008 Farm Bill established a tax deduction for expenditures paid or incurred for the purpose of achieving site-specific management actions recommended in recovery plans for species listed as threatened or endangered under the Endangered Species Act (ESA).
The deduction can be claimed by those taxpayers engaged in the business of farming. The amount of the deduction cannot exceed 25% of the taxpayer’s gross income from farming.
The following must be true to qualify for the deduction:
- There must be federally threatened or endangered species in the area.
- There must be an approved recovery plan for the species.
- The conservation actions implemented by the taxpayer must be consistent with management actions described in the approved recovery plan(s).
- They must occur in the location and habitat type for which the plan was written.
The U. S. Fish and Wildlife Service (FWS) and the National Marine Fisheries Service have developed recovery plans for a majority of the species that are federally listed as threatened or endangered. Final and revised final recovery plans are considered approved plans.
The FWS provides information online regarding threatened and endangered species, including a listing of species by county and the status of any applicable recovery plans.
The FWS cannot determine a taxpayer’s qualifications for the endangered species deduction; however, it can help taxpayers find information that will help them decide whether their conservation actions are consistent with site-specific management actions in approved recovery plans.
Qualifying Costs
The FWS can determine site-specific qualifying costs.
Federal Threatened and Endangered Species Tax Deduction Example
A landowner has 100 acres of eligible land in South Mississippi that they want to reforest in longleaf pine to benefit the federally threatened gopher tortoise. The Federal Threatened and Endangered Species Tax Deduction can be utilized to deduct the expenses of the reforestation effort.
Eligible Expenses
• Site preparation (herbicide and burning): $140/acre
• Longleaf pine seedlings & tree planting: $175/acre
Sample Calculation
Site Preparation (Herbicide and Burning): $140/acre × 100 acres = $14,000
Longleaf Pine Seedlings and Tree Planting: $175/acre × 100 acres = $17,500
Total Reforestation Costs = $31,500
Tax Deduction = $31,500
Approximate Cash Value of Deduction (assuming a 40% tax bracket) = $12,600
