The Pension Protection Act of 2006

The Pension Protection Act of 2006 provides significant tax incentives to individuals and farmers who place a conservation easement on their land. The Act allows landowners to deduct up to 50% of their adjusted gross income over a 16 year period until the value of the easement is used up. Farmers that receive more than 50% of their total gross income from "the trade or business of farming," may deduct up to 100% of their adjusted gross income over the same time period. Under previous law, the tax deduction for qualified conservation easements was limited to 30% of adjusted gross income over a 6 year period. Unless Congress acts to extend these benefits, the law remains effective through tax year 2007 and will revert back to previous provisions thereafter.

Conservation Easement � A legally recorded, voluntary agreement that limits the development or use of a property. Land protected by a conservation easement remains on the tax rolls and is privately owned and managed. Landowners who donate permanent conservation easements are generally entitled to tax benefits.

How Does the Deduction Work?

Landowner Adjusted Gross Income = $100,000
Conservation Easement Donation (appraised value) = $800,000
Previous Law: Owner could deduct $30,000/year for 6 years = $180,000 total allowed deduction (amount of donation unused = $620,000)
New Law: Owner deducts $50,000/year for 16 years = $800,000 total allowed deduction (100% of donation used in 16 years)
New Law for Qualifying Farmer/Rancher: Owner deducts $100,000/year for 8 years = $800,000 total deductions (100% of donation used in 8 years)
Example provided by the West Wisconsin Land Trust

For More Information

There are over 50 active land trusts in Wisconsin that protect more than 135,000 acres of land through conservation easements or direct purchase. For more information and to locate a land trust in your region, visit the Gathering Waters Conservancy website.

Additional information on the Pension Protection Act of 2006 is available from the federal government - search for: "Pension Protection Act." A fact sheet entitled 2006 Farm Conservation Tax Update is also available on the American Farmland Trust website - click on "Publications," followed by "Fact Sheets."

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