NC Conservation Tax Credit

N.C. Gen. Stat. §§ 105-153.11 and 105-130.34A provide a nonrefundable tax credit against state income taxes for certain eligible taxpayers that make a qualified donation (“NC Conservation Tax Credit”).1  Subject to the limitations set forth by the 2024 General Assembly, the NC Conservation Tax Credit is equal to twenty-five percent (25%) of the fair market value of the qualified donation.  

The NC Conservation Tax Credit is effective for taxable years beginning on or after January 1, 2025, for qualified donations made on or after January 1, 2025.2   Importantly, an eligible taxpayer must file an application with the North Carolina Department of Revenue (“NCDOR”) to request the tax credit. Moreover, the NC Conservation Tax Credit cannot be taken for the year in which the qualified donation is made but may be taken for the taxable year beginning in the calendar year in which the application for the credit becomes effective.

• 1

  Session Law 2024-32, Section 15 and Session Law 2025-4, Section 9.1.

• 2

  The tax credit expires for taxable year beginning on or after January 1, 2027, for donations made on or after January 1, 2027. See Session Law 2025-4, Section 9.1.(e).

Pass-through Entity1  - An entity or business, including a limited partnership, a general partnership, a joint venture, a Subchapter S Corporation, or a limited liability company, all of which are treated as owned by individuals or other entities under the federal tax laws, in which the owners report their share of the income, losses, and credits from the entity or business on their income tax returns filed with North Carolina.  For purposes of this definition, an owner of a pass-through entity is an individual or entity who is treated as an owner under the federal tax laws.

Qualified Donation2  - A donation of a qualified real property interest located in North Carolina that meets the following conditions:

1. It is donated in perpetuity for a “qualifying use” and is accepted in perpetuity for the use for which the qualified real property interest is donated.
2. It is donated to the state, a local government, or a body that is both organized to receive and administer lands for conservation purposes and qualified to receive charitable contributions pursuant to State law.3   Lands required to be dedicated pursuant to local government regulation or ordinance and dedications made to increase building density levels permitted under a regulation or ordinance are not eligible for the NC Conservation Tax Credit.

Qualified Real Property Interest4  - Any of the following interests in real property:

1. The entire interest of the donor other than a qualified mineral interest.
2. A remainder interest.
3. A restriction on the use of the real property granted in perpetuity (often referred to as a conservation easement).

Qualifying Use5  - One of the following uses:

1. Forestland or farmland preservation.
2. Fish or wildlife conservation.
3. A buffer to limit land use activities that would restrict, impede, or interfere with military training, testing, or operations on a military installation or training area or otherwise be incompatible with the mission of the installation.
4. Floodplain protection in a county that, in the five years preceding the donation, was the subject of a Type II or Type III gubernatorial disaster declaration, as provided in G.S. 166A-19.21, as a result of a natural disaster.
5. Historic landscape conservation.
6. Public trails or access to public trails.
    

• 1

  N.C. Gen. Stat § 105-228.90(b)(21).

• 2

  N.C. Gen. Stat. §§ 105-153.11(b)(8) and 105-130.34A(b)(7).

• 3

  Ibid.

• 4

  N.C. Gen. Stat. §§ 105-153.11(b)(9) and 105-130.34A(b)(8).  See Internal Revenue Code § 170(h)(2).

• 5

  N.C. Gen. Stat. §§ 105-153.11(b)(8)a. and 105-130.34A(b)(7)a.

Only an individual1,  a pass-through entity2,  or a C-Corporation3  (collectively, an “Eligible Taxpayer”) that made a qualified donation are eligible to apply for the NC Conservation Tax Credit.

• 1

  N.C. Gen. Stat. § 105-153.11(a).

• 2

  Ibid.

• 3

  N.C. Gen. Stat. § 105-130.34A(a).

To apply for the NC Conservation Tax Credit, an Eligible Taxpayer must file Form NC-74, Application for NC Conservation Tax Credit (“Application”) by the due date of the Application. 

Important:  An Eligible Taxpayer that made more than one qualified donation during a calendar year must file a separate Application for each qualified donation made.  

When applying for the NC Conservation Tax Credit, an Eligible Taxpayer must provide NCDOR any information demonstrating that the donation has met the conditions to qualify for the tax credit, including the following two items (collectively, “Supporting Information”):1 

1. A copy of the certification by the North Carolina Department of Natural and Cultural Resources (“NCDNCR”) identifying which qualified use the donated qualified real property interest is suitable.
    
2. A self-contained appraisal report or summary report as defined in Standards Rule 2-2 in the latest edition of the Uniform Standards of Professional Appraisal Practice as promulgated by the Appraisal Foundation for the donated qualified real property interest.  For fee simple absolute donations of real property, an Eligible Taxpayer may submit documentation of the county’s appraised value of the donated qualified real property interest, as adjusted by the sales assessment ratio, in lieu of an appraisal report.
   
   Notably, the burden of proving eligibility for the NC Conservation Tax Credit rests upon the Eligible Taxpayer.2  If the Eligible Taxpayer fails to submit the Supporting Information together with the Application, the Application will be rejected for failure to meet the requirements set forth in the enabling statutes.3 
    

• 1

  N.C. Gen. Stat. §§ 105-153.11(c) and 105-130.34A(c).

• 2

  N.C. Gen. Stat. §§ 105-153.11(d) and 105-130.34A(d).

• 3

  N.C. Gen. Stat. §§ 105-153.11(c) and 105-130.34A(c).

Form NC-74 must be properly filed with NCDOR between January 1 and April 15 of the year following the calendar year in which the qualified donation was made (“Application Period”).1   For example, if an Eligible Taxpayer made a qualified donation in calendar year 2025, the Eligible Taxpayer must file the Application on or before April 15, 2026.  NCDOR may not accept late Applications.2 

• 1

  Ibid.

• 2

  N.C. Gen. Stat. §§ 105-153.11(c) and 105-130.34A(c).

An Eligible Taxpayer can file the Application and Supporting Information using one of the accepted methods listed below.  If the Application is filed by paper, NCDOR strongly encourages the Eligible Taxpayer to use a delivery service that ensures proof of timely mailing and receipt. 

1. Online
   An Eligible Taxpayer may fill out the Application online via the NCDOR website. If the Eligible Taxpayer chooses to apply online, the Supporting Information must be uploaded with the Application at the time of submission. To be considered timely, the Application and the Supporting Information must be submitted on or before midnight on April 15th (Eastern Time). 
   
   After the Application is submitted, the Eligible Taxpayer will receive an email from NCDOR acknowledging receipt of the Application. Receipt of an online Application by NCDOR does not guarantee eligibility for the NC Conservation Tax Credit.
    
2. By Paper
   An Eligible Taxpayer may fill out a paper version of the Application. The paper version of the Application can be obtained from NCDOR’s website, www.ncdor.gov.  To be considered timely, the envelope containing the Application and the Supporting Information must be postmarked on or before April 15.1   Receipt of a paper Application by NCDOR does not guarantee eligibility for the NC Conservation Tax Credit.
   
   If the Eligible Taxpayer mails the Application using the U.S. Postal Service, the Application and the Supporting Information, must be mailed to:
   
   North Carolina Department of Revenue
   Attention: Conservation Tax Credit
   514 Daniels Street #409
   Raleigh, NC 27605
   
   If the Eligible Taxpayer mails the Application using a private delivery service, e.g., FedEx or UPS, the Application and the Supporting Information must be delivered to:
   
   North Carolina Department of Revenue
   Attention: Personal Taxes Division
   501 North Wilmington Street
   Raleigh, NC 27604
    

• 1

  If April 15th falls on a weekend or a holiday, the due date to file the paper application is delayed until the next business day. SeeTA-16-1.

Certain statutory limitations apply to the NC Conservation Tax Credit.  For example, the total allocated tax credit1  allowed to all Eligible Taxpayers that apply for the tax credit in a taxable year cannot exceed five million dollars ($5,000,000), of which three million two hundred fifty thousand dollars ($3,250,000) is prioritized for qualified donations of forestland or farmland preservation.2   The law also limits the amount of tax credit that can be allocated to an Eligible Taxpayer.3   Important: An Eligible Taxpayer that intends to apply for the NC Conservation Tax Credit should become familiar with the NC Conservation Tax Credit enabling statutes.4 

Once the Application Period closes, NCDOR will review each Application received to ensure the Application and the Supporting Information were timely filed.5  NCDOR will then determine the amount of tax credit to allocate to the Eligible Taxpayer including any applicable reductions required by law to the requested tax credit.6   NCDOR will notify each Eligible Taxpayer in writing of the amount of the requested tax credit, including any reduction, on or before December 31 of the year following the calendar year the qualified donation was made.7 
 

• 1

  N.C. Gen. Stat. §§ 105-153.11(b)(1) and 105-130.34A(b)(1).

• 2

  N.C. Gen. Stat. §§ 105-153.11(l) and 105-130.34A(h).

• 3

  N.C. Gen. Stat. §§ 105-153.11(e) and (f) and 105-130.34(a)

• 4

  N.C. Gen. Stat. §§ 105-153.11 and 105-130.34A.

• 5

  N.C. Gen. Stat. §§ 105-153.11(c) and 105-130.34A(c).

• 6

  N.C. Gen. Stat. §§ 105-153.11(l) and (m) and 105-130.34A(h) and (i).

• 7

  N.C. Gen. Stat. §§ 105-153.11(m) and 105-130.34A(i).

The NC Conservation Tax Credit may not be taken for the year in which the qualified donation was made but may be taken for the taxable year beginning in the calendar year in which the Application became effective.1  NCDOR will provide information on how to claim a NC Conservation Tax Credit on the applicable NCDOR tax form in the year the tax credit can be claimed.

Importantly, an Eligible Taxpayer that plans to claim the NC Conservation Tax Credit on their North Carolina income tax return must maintain any records and documentation necessary to determine and verify the amount of tax credit claimed.2 
 

• 1

  N.C. Gen. Stat. §§ 105-153.11(a) and 105-130.34A(a).

• 2

  N.C. Gen. Stat. §§ 105-153.11(d) and 105-130.34A(d).

1.    Facts

On September 1, 2025, John Doe, a calendar year taxpayer, donated a qualified real property interest in perpetuity to the State of North Carolina (“State”) for the purpose of farmland preservation (“Donation”).  The State accepted the Donation in perpetuity for farmland preservation.  The property is located in Sampson County, North Carolina.  The Donation was certified by NCDNCR as suitable for farmland preservation. The Donation qualifies as a donation of a qualified real property interest as that term is defined in IRC § 170(h)(2).

On March 1, 2026, John Doe filed Form NC-74, Application for NC Conservation Tax Credit (“Application”), with NCDOR.  John Doe included a copy of the NCDNCR certification with the Application.1   John Doe also included with the Application a summary appraisal report that meets the requirements of State law.2 

NCDOR Analysis

John Doe timely filed the Application and the Supporting Information with NCDOR.  Because John Doe’s Donation was certified by NCDNCR as suitable for farmland preservation, NCDOR will include John Doe’s requested credit in NCDOR’s computation of prioritized tax credits.3  

On December 15, NCDOR notified John Doe of the amount of his allocated tax credit.4   John Doe can claim the amount of allocated tax credit on John Doe’s 2026 individual income tax return (due to be filed in calendar year 2027).

2.    Facts
On December 15, 2025, Partnership XYZ, a calendar year taxpayer, donated a qualified real property interest in perpetuity to a local North Carolina government for the purpose of wildlife conservation (“Donation”).  The local government accepted the Donation in perpetuity for wildlife conservation. The property is located in New Hanover County, North Carolina.  The Donation was certified by NCDNCR as suitable for wildlife conservation. The Donation qualifies as a donation of a qualified real property interest as that term is defined in IRC § 170(h)(2).

On March 1, 2026, Partnership XYZ filed Form NC-74, Application for NC Conservation Tax Credit (“Application”), with NCDOR.  Partnership XYZ included a copy of the NCDNCR certification with the Application.5   Partnership XYZ also included with the Application a summary appraisal report that meets the requirements of State law.6 

NCDOR Analysis

Partnership XYZ timely filed the Application and the Supporting Information with NCDOR.  Because Partnership XYZ’s Donation was certified by NCDNCR as suitable for wildlife conservation, NCDOR will not include Partnership XYZ’s requested credit in NCDOR’s computation of prioritized tax credits.7   NCDOR will, however, include Partnership XYZ’s requested credit in the computation of nonprioritized credits.8 

On December 15, NCDOR notified Partnership XYZ of the amount of its allocated tax credit.9   Partnership XYZ must pass through to each of its owners the owner’s distributive share of the allocated tax credit. Partnership XYZ may allocate the tax credit only to an owner that was an owner of Partnership XYZ as of December 31, 2026.10   Within the limitations of State law,11  each owner can claim the amount of allocated tax credit on the owner’s 2026 income tax return (due to be filed in calendar year 2027).

3.    Facts
On September 1, 2025, Corporation ABC, a calendar year taxpayer, donated a qualified real property interest in perpetuity to the State of North Carolina (“State”) for the purpose of forestland preservation (“Donation”).  The State accepted the Donation in perpetuity for forestland preservation.  The property is located in Mecklenburg County, North Carolina.  The Donation was certified by NCDNCR as suitable for forestland preservation. The Donation qualifies as a donation of a qualified real property interest as that term is defined in IRC § 170(h)(2).

On April 16, 2026, Corporation ABC filed Form NC-74, Application for NC Conservation Tax Credit (“Application”), with NCDOR.  Corporation ABC included a copy of  the NCDNCR certification with the Application.12   Corporation ABC also included with the Application a summary appraisal report that meets the requirements of State law.13 

NCDOR Analysis

Corporation ABC did not timely file the Application with NCDOR.  Because Corporation ABC did not timely file the Application, NCDOR cannot accept Corporation ABC’s Application.14 

Corporation ABC’s requested credit will not be included in NCDOR’s computation of prioritized tax credits. Importantly, Corporation ABC cannot claim the amount of NC Conservation Tax Credit applied for on its 2026 corporate income tax return (due to be filed in calendar year 2027).

4.    Facts
On December 1, 2025, Corporation XYZ, a calendar year taxpayer, donated a qualified real property interest in perpetuity to the State of North Carolina (“State”) for the purpose of fish conservation (“Donation”).  The State accepted the Donation in perpetuity for fish conservation.  The property is located in Pender County, North Carolina.  The Donation was certified by NCDNCR as suitable for fish conservation. The Donation qualifies as a donation of a qualified real property interest as that term is defined in IRC § 170(h)(2).

On April 15, 2026, Corporation XYZ filed Form NC-74, Application for NC Conservation Tax Credit (“Application”), with NCDOR.  Corporation XYZ mailed the Application using the U.S. Postal Service with proof of receipt.  However, Corporation XYZ did not include a copy of the NCDNCR certification with the Application or a summary appraisal report that met the requirements of State law.15 

NCDOR Analysis

Although Corporation XYZ timely filed the Application with NCDOR, Corporation XYZ did not timely file the Supporting Information with NCDOR.  Because Corporation XYZ did not timely file the Supporting Information, NCDOR cannot accept Corporation XYZ’s Application.16 

Corporation XYZ’s requested credit will not be included in NCDOR’s computation of non-prioritized tax credits. Importantly, Corporation XYZ cannot claim the amount of NC Conservation Tax Credit applied for on its 2026 corporate income tax return (due to be filed in calendar year 2027).
 

• 1

  N.C. Gen. Stat. § 105-153.11(c)(1).

• 2

  N.C. Gen. Stat. § 105-153.11(c)(2).

• 3

  N.C. Gen. Stat. § 105-153.11(b)(7).

• 4

  N.C. Gen. Stat. § 105-153.11(b)(1).

• 5

  N.C. Gen. Stat. § 105-153.11(c)(1).

• 6

  N.C. Gen. Stat. § 105-153.11(c)(2).

• 7

  N.C. Gen. Stat. § 105-153.11(b)(7).

• 8

  N.C. Gen. Stat. § 105-153.11(b)(4).

• 9

  N.C. Gen. Stat. § 105-153.11(b)(1).

• 10

  N.C. Gen. Stat. § 105-153.11(f).

• 11

  N.C. Gen. Stat. §§ 105-153.11(e)(f)(g) and (h) and 105-130.34A(e).

• 12

  N.C. Gen. Stat. § 105-130.34A(c)(1).

• 13

  N.C. Gen. Stat. § 105-130.34A(c)(2).

• 14

  N.C. Gen. Stat. §105-130.34A(c).

• 15

  N.C. Gen. Stat. §105-130.34A(c).

• 16

  Ibid.