On the final day of the 2024 legislative session, the Colorado General Assembly passed Senate Bill 24-126, securing a huge win for the people of Colorado. The bill expands the state’s existing Conservation Easement Tax Credit program by increasing the aggregate tax credit certificate cap by $5 million for a total of $50 million annually beginning in 2025. This increase intends to help Colorado meet the current demand for credits, address the current project backlog, and expand conservation opportunities across the state.

As a reminder, under current law, a landowner may claim a transferable Colorado income tax credit in the amount of 90% of the fair market value of the donated portion of the conservation easement up to $5 million issued in increments of $1.5 million per year.

The bipartisan support for the bill underscores the popularity and success of Colorado’s conservation easement tax credit program and reflects the willingness of Coloradans to continue to preserve the state’s natural places.

In addition to increasing the tax credit cap, the bill makes several other notable changes, including:

1. Extends the conservation easement oversight commission and certified holder program indefinitely.
2. Authorizes issuing multiple certificates for a tax credit, allowing multiple transfer of such tax credits.
3. Insurance companies are permitted to purchase credits to offset insurance premium taxes.
4. 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, with earlier filed credits taking precedence over later filed credits.
5. 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 provided that the tax credit shall not exceed $5 million. Until then, taxpayers may claim up to 90% of the fair market value of the donated portion of the easement subject to the same $5 million cap.
6. Increases the total aggregate amount that may be refunded to the owners, partners, and shareholders donating an easement during one calendar year from $50,000 to $200,000 beginning January 1, 2027. 
7. A conservation easement granted on or after January 1, 2025 may include a provision that allows the holder to approve expanded wind or solar energy facilities that are compatible with and do not impair conservation values if technological or legal changes provide that these facilities are allowable under the Internal Revenue Code.

The bill was signed by the Governor yesterday afternoon. With the passing of this bill, Colorado’s conservation easement tax credit program is poised to continue to be an effective vehicle for protecting the state’s agricultural properties, open space, and scenic lands for many years to come—further cementing Colorado as a national leader in conservation.

Please contact Heather Haney, Stephanie Pope, or Bill Silberstein for question about the bill or for more information on or assistance with conservation easements.