LAND CONSERVATION INCENTIVES
HB3457, titled the Land Conservation Incentives Act, would amend the Illinois Income Tax Act to create a new income tax credit for qualifying donations of real property interests made for conservation and preservation purposes. Beginning with taxable years on or after January 1, 2025, a taxpayer could claim a credit equal to the fair market value of a qualified donation, up to $200,000, for gifts of fee simple interests, remainder interests, or perpetual conservation restrictions conveyed to a public or private conservation agency. The bill requires the donation to be substantiated by a qualified appraisal and limits the credit so it cannot reduce tax liability below zero.
The measure also allows unused credits to be carried forward for up to 20 years and permits transfer of unused credits to another taxpayer for consideration, subject to reporting requirements. For pass-through entities such as partnerships, trusts, estates, LLCs, and S corporations, the bill specifies how credits are allocated among owners or beneficiaries and bars both the entity and the individual owners from claiming the same credit twice. It also imposes a three-year ownership rule for pass-through entities, with an exception for family-held entities, and directs the Department of Natural Resources and the Department of Revenue to adopt implementing rules and report later on protected lands and fiscal impact.
HB3457 would add a new Section 235 to the Illinois Income Tax Act, creating a state tax incentive tied to land conservation donations. It would affect taxpayers who donate qualifying real property interests, conservation organizations and land trusts that receive those interests, and pass-through entities that hold land or conservation rights. The bill also requires administrative rulemaking by the Department of Natural Resources and the Department of Revenue and establishes reporting obligations on protected lands and the fiscal effect of credits claimed. In practical terms, it would expand state tax law to encourage permanent conservation easements and related land preservation transactions.
Based on the bill text and the absence of recorded committee discussion or votes in the provided materials, the overall sentiment appears supportive of conservation and private land stewardship. The findings section frames the bill as a way to protect natural resources, farmland, wetlands, historic resources, and open space while complementing existing state conservation laws. Because there is no voting history or transcript, there is no documented opposition or endorsement in the supplied record beyond the bill’s pro-conservation purpose.
The main potential points of contention are the fiscal cost of the credit, the valuation of donated property interests, and the possibility of credit transferability creating tax planning opportunities. The bill tries to address some of these concerns by capping the credit at $200,000, requiring a qualified appraisal, limiting use to the amount of tax otherwise due, and preventing double claims by both an entity and its owners. Another possible issue is the three-year holding requirement for pass-through entities, which may be seen as limiting eligibility, though the family-owned entity exception softens that restriction. No specific objections are recorded in the provided committee or vote materials.