Forest landowners in Maryland can increase the financial returns on their forest stewardship efforts by minimizing property, income, and estate taxes. Resources are available at dnr.maryland.gov. As we wind through tax season, MFA wanted to highlight the income tax modification program for eligible landowners.
What is it?
The Maryland Income Tax Modification for Reforestation and Timber Stand Improvement Program provides a financial incentive for forest landowners to manage their forest land by allowing them to deduct double the cost of reforestation and timber stand improvement from their federal adjusted gross income for Maryland income tax purposes.
Who qualifies?
Participants must own or lease between 3 to 1,000 acres of forest land capable of growing more than 20 cubic feet of wood per acre per year, which is available for the primary purpose of growing and harvesting trees. Christmas tree and ornamental tree operations are not eligible. Only forest management practices installed on 3 to 1,000 acres may receive the tax modification in any one year.
How does it work?
This program allows eligible participants to deduct double the cost of reforestation and timber stand improvement practices, less any cost-share assistance received through other programs (WIP, EQIP, etc.). This is reported on the Maryland tax return as a subtraction from the federal adjusted gross income. Practices receiving the modification must remain in effect for at least 15 years. Periodic inspections will occur. If they are not maintained, the tax savings must be repaid.
How many people participate?
Approximately 30-50 landowners participate annually.
How can I learn more?
Visit dnr.maryland.gov/forests/Pages/programapps/tax.aspx for details on the program as well as the required documents (DNR 393) and instructions. Taxpayer information, forest management practices and supplemental practices, as well as financial cost calculations are required as well as forester certification. A Professional Forester must sign, date and affix professional seal to form DNR 393 in order to process the Maryland Income Tax Modification.
You may also contact your local Department of Natural Resources forester for more information or Daniel Rider at the Maryland Department of Natural Resources Forest Service, located at 580 Taylor Avenue, Annapolis, Maryland 21401.
Phone: (410) 260 - 8583
E-mail: daniel.rider@maryland.gov