Conservation Easement Income Tax Credit

Under current law, the conservation easement oversight commission (commission) and the certified holder program (program) are repealed on July 1, 2026. The bill eliminates the repeal dates to extend the commission and program indefinitely.

The bill replaces a nonvoting member of the commission who represents the great outdoors Colorado trust fund (GOCO) with a voting member who represents GOCO and who is appointed by and serves at the pleasure of the executive director of GOCO. The bill also adds a voting member appointed by the governor who represents a socially disadvantaged farmer or rancher as defined in federal law . The bill provides that a conservation easement tax credit (credit) is not available after December 31, 2031, except for credits created on or before December 31, 2031, and subsequently transferred or carried over as a credit in other tax years. There is currently a cap of $45 million for the total value of conservation easement income tax credits that may be claimed by and credited to donors of a conservation easement (easement) in one calendar year. The bill increases the cap to $60 million in calendar year 2025, to $70 million in calendar year 2026, and to $75 million in each subsequent calendar year . Currently, credits filed after the cap is reached are placed on a wait list for the next calendar year. The bill provides that credits filed after the cap is reached are placed in a priority system of allocation based on the date the application for the credit was filed, the completeness of the application, and whether the application is approved. Earlier filed credits take precedence over later filed credits. Credits for easements donated in a prior year are eligible for tax credit certificates in subsequent years in order of application . Current law provides that partnerships, S corporations, or other similar entities (pass-through entities) may not be transferees of a credit. The bill allows pass-through entities to be transferees of a credit beginning on January 1, 2025. The bill also allows insurance companies to purchase credits to offset insurance premium taxes. Currently, a credit may be transferred once, in whole or in part, from a donor to a transferee. The bill allows a transferee to transfer a credit to a subsequent transferee beginning with the income tax year starting on January 1, 2025. Current law provides that a taxpayer may claim 90% of the fair market value of the donated portion of the easement. The bill provides that on or after January 1, 2027, a taxpayer may only claim 80% of the fair market value of the donated portion of the easement. Credits may be issued in increments of no more than $1.5 million per year. Currently, the total aggregate amount of the credit that may be refunded to the owners, partners, and shareholders of an entity donating an easement may not exceed $50,000 for that income tax year. The bill provides that such a refund may not exceed $200,000 for income tax years beginning on or after January 1, 2027. Current law allows a taxpayer to elect to claim a refund from the donation of an easement only in a year for which the state controller certifies that the amount of state revenues for the fiscal year ending in the income tax year for which the refund is claimed exceeds the limitation on state fiscal year spending for that fiscal year. The bill eliminates the requirement that to claim the credit, allowable revenues must exceed allowable spending. The bill requires a conservation easement granted on or after January 1, 2025, to include a provision that, subject to specified requirements, allows the holder to approve expanded wind or solar energy facilities that are compatible with and do not impair conservation values.

For the 2024-25 state fiscal year, $12,925 is appropriated from the conservation cash fund to the department of regulatory agencies for use by the division of conservation.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)