Forest Conservation Tax Credit Program

The Forest Conservation Tax Credit Program (FCTC) was created by the 2022 legislature to provide a financial benefit to small forestland owners who support conservation and habitat protection by retaining a larger unharvested area next to streams as a conservation area for protection of wildlife habitat and aquatic species.

Beginning Jan. 1, 2024, small forestland owners who agree to limit timber harvests in their forest conservation area for 50 years by following the standard practice for harvests rather than the small forestland owner minimum option can receive a tax credit based on the value of the unharvested timber inside the forest conservation area and related costs.

This page provides an introduction to the Forest Conservation Tax Credit. You can contact your local SFO Forester for more information.

Who can receive the tax credit?

To be eligible for the Forest Conservation Tax Credit, you must:

• Submit a notification of operation for a timber harvest type 1, 2, or 3 next to an eligible stream or land area that has specific requirements for vegetation retention and a harvest area that is at least the same size as the area that will not be harvested. Type 4 harvests are not eligible for the credit.
  

• Agree to follow the standard practice harvesting rules.
  

• Inform the Department of Forestry that you want to receive the Forest Conservation Tax Credit.

• Confirm that you qualify* as a small forestland owner who:
• Owns less than 5,000 acres of forestland in Oregon;
• Harvested an average of less than 2 million board feet of Oregon timber per year during the past three years; and

• Does not expect to harvest more than an average of 2 million board feet of Oregon timber per year during the next 10 years.
  

*Under special circumstances, the State Forester can allow a landowner to receive the tax credit if the landowner has exceeded or expects to exceed the harvest limits. Contact your SFO Forester for more information on special circumstances.

How do I receive the tax credit?

After your eligibility for the tax credit has been verified by the SFO Office, you must submit the following within 90 days of completion of the harvest:

• Documentation of the value of the trees that were not harvested, known as “stumpage value" (see determining stumpage value);
  

• Documentation of the costs of determining the stumpage value; and

• The cost of filing and recording a deed restriction with the county clerk in the county where the forestland is located.
  

Using this information, the SFO Office will determine the tax credit amount and provide you with a tax credit certificate. You will then need to file a deed restriction with the county clerk to complete the tax credit process.

How much is the tax credit?

The tax credit is equal to the stumpage value of the timber left unharvested between where you could have harvested using the minimum option and where you did harvest using the standard practice harvesting rules (the forest conservation area), plus the appraisal costs for determining stumpage value and the cost of filing a deed restriction with the county.

Additionally, you can seek credit for land that is between the edge of some dry stream channel areas and the edge of the minimum option harvest area, although a different calculation is used to determine the tax credit amount for this land.

How can the tax credit be used?

You can use the tax credit to manage your personal or corporate income or corporate excise tax liability. The tax credit may be used as one lump sum, spread out over many consecutive or non-consecutive tax years, or held for use in any future tax year.

Changing ownership of the tax credit

The tax credit may be passed to others in the event of a forestland owner's death.

If the forestland is sold, the tax credit remains with the original landowner and cannot be transferred. The new owner must follow the harvest restriction or work with the Department of Revenue to address repayment.

Frequently Asked Questions (FAQs)