The Natural Heritage Preservation Tax Credit Program was created for the protection of wildlife habitat, open space, and agricultural lands. Under this program, property can be contributed to the state, any local government, or to any nonprofit organization designated by a local government, based on specified criteria. The credit is allowed against net tax, in an amount equal to 55% of the fair market value of any qualified contribution made by the taxpayer to the state, any local government, or any designated nonprofit organization.
The purpose of the Program is to protect wildlife habitat, parks and open space, archaeological resources, agricultural land, and water by providing state tax credits for donations of qualified land (fee title or conservation easement) and water rights. The program objectives include the fostering of public/private partnerships to resolve land use and water disputes; assisting habitat stewardship; and demonstrating the state's commitment to protect natural resources by rewarding landowners who perceive habitat as an asset rather than a liability. Initially implemented in 2001, the Program is a successful effort that to date has resulted in the approval of $48.2 million in tax credits, and the donation and transfer of ownership of more than 7,967 acres of critical parkland, open space, agricultural conservation easements, wildlife corridors and archeological resources.
Responding to increased fiscal demands and pressure upon the General Fund, the Legislature suspended the Program in 2002. However, in recognition of the effectiveness of the program as a tool to leverage limited fiscal resources and protect critical land and water resources, the Tax Credit Act was amended, and the Program reinstated effective January 1, 2005. Specifically, the Tax Credit Act was amended by Chapter 226, Statutes of 2004 (SB 1100) which allows tax credits to be awarded until June 30, 2008, provided there is no net loss of revenue to the General Fund for tax credits awarded between July 1, 2002 and June 30, 2008. In addition, Chapter 715, Statutes of 2004 (AB 2722) provides a process to reimburse the General Fund for approved tax credits using eligible bond funds. Effective January 1, 2010, the Program was once again authorized to approve donations and eligible tax credits until June 30, 2015.
Through passage of AB 1219 in 2021, the program has been renewed for qualified contributions made from January 1, 2021, through June 30, 2026. The credit had previously been made unavailable for contributions made after June 30, 2020. California allows the credit under the personal income tax law and the corporation tax law. Taxpayers may claim the credit for a portion of the value of real property donated to the state, local governments, or designated nonprofit organizations for conservation purposes.