Finances and taxes

Because private woodland management provides many benefits to nature and society, public financial assistance is available. These options include tax-relief programs, incentive payments, and cost-sharing for your woodland projects. A few of these programs are listed below.

These programs are always changing, so be sure to visit this page often or ask your local forester for the most up-to-date information.

Click on topic below to reveal more information. Click again to hide.

Cost-share programs


  • Conservation Reserve Program (CRP)–Administered through the Farm Service Agency, CRP provides annual compensation payments to farmers who remove environmentally sensitive land from agricultural production and plant perennial species such as trees that improve soil and water quality and wildlife habitat. Contracts last 10–15 years.
  • Environmental Quality Incentive Program (EQIP)–EQIP is a program of the Natural Resources Conservation Service (NRCS) that provides reimbursement to landowners who implement certain conservation practices. Technical assistance is also provided. Requirements include a "practice" or project plan that has a schedule of planned activities. Contracts last up to 10 years.



  • Soil and Water Conservation Districts (SWCDs)–Cost-share funding may be available through your local SWCD, which in addition to receiving cost-share funds from the state of Minnesota's Board of Soil and Water Resources, can sometimes access funding sources such as those generated by Minnesota's Legacy Amendment.
Tax and incentive programs


  • Reforestation tax credit –If you treat your woods like an investment or a business, you may be eligible for certain federal tax incentives. For example, the IRS allows landowners to deduct eligible reforestation costs from their income—up to $10,000 per year, with the option to amortize (write off) additional expenses over a 7-year period.


  • Sustainable Forest Incentive Act (SFIA) –This legislation, originally passed in 2001, provides annual incentive payments to encourage sustainable forest management and keep forests as forests on the landscape. Private landowners can receive a payment for each acre of qualifying forest land they enroll in SFIA. In return, they agree not to develop the land and to follow a forest management plan while they are in the program. All enrolled land must remain in SFIA for at least 8, 20, or 50 years depending on the recorded covenant length.
  • 2c Managed Forest Land – Created in 2008, 2c is a property tax designation that offers woodland owners a reduced rate of 65 percent on actively managed woodland. Requirements include a minimum enrollment of 20 qualifying acres and a Woodland Stewardship Plan that was written in the last 10 years, is registered with the DNR, and includes a schedule of planned activities.
  • Green Acres (2a Productive Agricultural Land) and Rural Preserve (2b Nonproductive Agricultural Land)–These programs provide reduced taxes on woodland that produces agricultural products (maple syrup, biomass) or is adjacent to a landowner's farmland. More information on the Minnesota Department of Revenue website.
Conservation easements

Some landowners want to make sure their land will never be developed or converted to another use by selling or donating a conservation easement. Conservation easements serve a variety of conservation purposes and are generally intended to protect important features of a property. They are voluntary, legal agreements by the landowner to give up some of the rights associated with their property, such as the right to develop, divide, mine, or farm the land to protect the important land, water, habitat, and other conservation features. Conservation easements vary, depending on the host organization and the landowner's specifications. Perpetual conservation easements are intended to last forever. Term easements are for a specified length of time. Since the agreements are tied to the land and not the owner, the property will be kept in a largely natural state no matter who owns it in the future. Easements are visited regularly (usually annually) by the organization holding the easement to monitor the conditions of the property. Public agencies and some nonprofit organizations whose purposes include conservation preservation can hold conservations easements. Interested landowners can either sell or donate an easement to one of these organizations.

Here are some examples of organizations that have conservation easement programs.

  • Agricultural Conservation Easement Program (ACEP)–Administered by the Natural Resources Conservation Service (NRCS), ACEP protects agricultural and nonindustrial private woodlands from development through agricultural conservation easements. The easements can be temporary (30 years) or permanent. The program also offers wetland conservation easements that are purchased and then maintained by NRCS. Easement plans are required.
  • Forest Legacy Program (FLP) program are administered by the DNR to protect important private working forests and prevent the conversion of forests to non-forest uses. Working forests provide an array of public benefits including habitat, clean water, recreational opportunities, timber, and other forest products. The FLP is a national program administered in partnership with the USDA Forest Service. The program is intended to conserve and protect private forests that provide economic, recreational, and economic benefits to the state and its citizens. Conservation easements are permanent and easement rights are either purchased or donated.
  • Reinvest in Minnesota (RIM)–RIM is administered by the state Board of Water and Soil Resources and local soil and water conservation districts. The program focuses on restoring wetlands and sensitive agricultural lands such as those along rivers. An easement plan is mandatory. The landowner is responsible for maintaining any conservation projects in the plan, but the program can provide financial assistance. Conservation easement rights are purchased and most easements are permanent, but some may be temporary (20 years or more).
  • Nonprofit organizations–Some nonprofit organizations purchase or accept donated conservation easements on land that fits certain criteria. Examples include Minnesota Land Trust, Ducks Unlimited/Wetlands America Trust, and The Nature Conservancy.
Transferring land to the next generation

If you want to keep your woodland in the family and make sure it remains intact, consider creating a family limited liability company (FLLC or LLC) for your land. An LLC is a business entity that can hold land and be used to manage the land while shielding the owners from certain personal liability issues. Placing woodland in an LLC also helps landowners transfer their property to the next generation while minimizing the risk that the property will be forcefully sold upon demand of one of the heirs—known as "avoidance of partition" in legal terms. Rather, the land is titled in the name of the company, which is divided into units of membership similar to the way a corporation is divided into shares. Using this model, you as the owner can gift portions of the value of the land in the form of company units to your heirs over time. You retain decision-making power over the land as a majority partner until such time that you see fit to pass on responsibility. Passing land on in this way—as annual gifts below a certain maximum value—can help landowners potentially decrease the estate taxes associated with high-value property.

Importantly, LLCs offer opportunities to engage the next generation in caring for and managing the land within your lifetime, and may provide a good platform to pass on your goals and values for the land as well as the property itself. While LLCs are easy to create, you may need to take many steps to ensure that the LLC functions as you intend. Further, inheritance and tax law can be complicated and may change frequently. For these reasons, it is important to work with a certified public accountant or attorney who is familiar with the specific needs of Minnesota woodland owners.

Getting started with intergenerational land transfer

Back to top