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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 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)

​Standard practice and minimum option refer to the different rules for harvesting along the sides of specified waters of the state within which vegetation retention and special management practices are required for the protection of water quality, water movement, and fish and wildlife habitat.​​

The minimum option allows small forestland owners to harvest closer to the edge of streams than other landowners who must follow standard practice harvesting rules, which require a greater amount of unharvested area next to streams.

Streams eligible for the Forest Conservation Tax Credit include fish-bearing streams, known as Type F and Type SSBT streams, and non-fish bearing streams known as Type N streams. Streams classified as domestic use streams, also known as Type D streams, are not eligible for the tax credit.​

Stream information is available in the Department of Forestry’s Forest Activity Electronic Reporting and Notification System (FERNS) and will be updated as directed by rules adopted under the Private Forest Accord and Senate Bill 1501 (2022). If you have questions regarding a stream on your land, consult with your local SFO Forester.​​

Yes, small forestland owners who choose to harvest using the standard practice when minimum option harvesting is not available for their watershed due to the five-percent cap being reached within their fifth field watershed can received the tax credit. In this circumstance, the calculation of the tax credit amount includes 125% of the stumpage value of the timber left in the forest conservation area between the minimum option harvest boundary and the standard practice harvest boundary.​

​There are three methods approved for determining stumpage value for the Forest Conservation Tax Credit. Each method requires specific information and documentation. The accepted methods for determining stumpage value are:

  • Conversion Return Method
  • Actual Comparison Method
  • Cash Flow Modeling Method

To learn more about determining the value of standing trees, see determining stumpage value.

​No, the Forest Conservation Tax Credit may not be transferred to a new owner as part of the sale of forestland. The tax credit may only transfer upon the death of the tax credit holder.​

​No, the Forest Conservation Tax Credit does not expire and may be carried forward to any future tax year.​

​No, the Forest Conservation Tax Credit is not refundable. If your tax credit exceeds your tax liability for the year, you may use the remaining tax credit in future tax years.​

​Yes, the Forest Conservation Tax Credit is available to individuals who reside outside of Oregon but qualify as small forestland owners based on ownership of Oregon forestland.​

​No, the Forest Conservation Tax Credit applies only to taxes imposed under ORS chapters 316, 317, and 318 for personal income tax or corporate income or excise tax and cannot be used for harvest taxes imposed under ORS chapter 321.​