HB3457 104TH GENERAL ASSEMBLY

LRB104 07862 HLH 17908 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB3457

Introduced 2/18/2025, by Rep. Will Guzzardi

SYNOPSIS AS INTRODUCED:

35 ILCS 5/235 new

Provides that the amendatory Act may be referred to as the Land Conservation Incentives Act. Amends the Illinois Income Tax Act. Provides that, for taxable years beginning on or after January 1, 2025, there is a tax credit of up to $200,000 with respect to qualified real property interest conveyed for conservation and preservation purposes as the qualified donation by the taxpayer, with certain requirements. Provides that any taxpayer claiming this tax credit may not claim a credit under any similar law for costs related to the same project. Provides that any tax credits from the donation of an interest in land made by a pass-through tax entity such as a trust, estate, partnership, limited liability corporation or partnership, limited partnership, S corporation, or other fiduciary shall be used either by such entity if it is the taxpayer on behalf of such entity or by the member, manager, partner, shareholder, or beneficiary, as the case may be, in proportion to their interest in such entity if the income, deductions, and tax liability passes through such entity to such member, manager, partner, shareholder, or beneficiary, and that such tax credits may not be claimed by both the entity and the member, manager, partner, shareholder, or beneficiary for the same donation. Requires the Department of Natural Resources and Department of Revenue to adopt rules. Defines terms. Makes findings.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. References to Act. This Act may be referred to as the Land Conservation Incentives Act.

Section 5. Findings and purpose.

(a) The General Assembly finds that the State of Illinois' unique natural resources, wildlife habitats, open spaces, agricultural and forested resources, wetlands, and historic resources are of significant benefit to the State and the public.

(b) The General Assembly finds that the State of Illinois' unique natural resources and distinctive natural heritage, including habitat for plants, animals and natural communities, are being lost at an alarming rate.

(c) The General Assembly finds that much of the State of Illinois' unique natural, historical and open space resources and habitats are found on lands that are privately owned.

(d) The General Assembly desires to encourage private landowners to be stewards of lands and waters that are important habitat or designated natural areas or which contain significant natural, open space, and historic resources.

(e) The General Assembly desires to complement and advance existing state priorities as embedded in identified in State law, including, but not limited to, the Illinois Agricultural Areas Conservation and Protection Act, the Illinois Natural Areas Preservation Act, the Real Property Conservation Rights Act, and the Illinois Farmland Preservation Act, thereby preserving public financial resources and leveraging public expenditures.

(f) The General Assembly desires to provide private landowners with incentives to encourage protection of private lands for open space, natural resources, biodiversity conservation, water supply, outdoor recreation, farmland and forestland preservation, historic preservation, and land conservation purposes.

Section 10. The Illinois Income Tax Act is amended by adding Section 235 as follows:

(35 ILCS 5/235 new)

Sec. 235. Conservation land tax credit.

(a) In this Section:

"Conservation purposes" means for the purpose of open space conservation, natural resource conservation, biodiversity conservation, land conservation, agricultural conservation, watershed conservation, or historic preservation.

"Public or private conservation agency" means:

(1) a governmental body;

(2) a private not-for-profit charitable corporation or trust:

(A) authorized to do business in the State of Illinois;

(B) authorized to acquire, hold, and maintain title to real estate or interests in real estate;

(C) organized and operated for conservation purposes, including natural resource protection or land conservation, or historic preservation purposes; and

(D) meeting other criteria or certification determined by rule of the Department of Natural Resources; or

(3) a non-profit corporation having tax-exempt status as a public charity under the U.S. Internal Revenue Code of 1986, as amended, and having received accreditation through the Land Trust Accreditation Commission.

"Qualified donation" means the transfer and conveyance by gift, without consideration, of all or a portion of a qualified real property interest to a public or private conservation agency for a conservation purpose, provided that those purposes are secured in perpetuity through (i) restrictions recorded in the real property records of the county where the qualified real property interest is located, (ii) restrictions recorded in the real property records in the county where the qualified real property interest is located, or (iii) by one or more other mechanisms to be developed by rule which will secure the real property for conservation purposes in perpetuity.

"Qualified real property interest" means any one or more of the following interests in real property:

(1) a fee simple interest;

(2) a remainder interest; or

(3) a restriction (granted in perpetuity and created pursuant to Illinois real property law) on the use that may be made of the real property and that complies with Section 170(h)(2)(c) of the federal Internal Revenue Code.

(b) For taxable years beginning on or after January 1, 2025, there shall be allowed as a credit against the tax imposed by Section 201 for the taxable year with respect to qualified real property interest conveyed for conservation and preservation purposes as the qualified donation by the taxpayer an amount equal to the fair market value of the qualified donation made of qualified real property interest conveyed for conservation and preservation purposes.

(1) Any qualified donations made by a taxpayer under this Section for the credit against the tax imposed by Section 201 shall be substantiated by a Qualified Appraisal prepared by a Qualified Appraiser, as those terms are defined under 26 CFR 1.170A-17.

(2) The amount of the credit that may be claimed by a taxpayer under this Section shall not exceed $200,000. In addition, in any one tax year the credit used may not exceed the amount of individual or corporate income tax otherwise due. Any portion of the credit which is unused in any one tax year may be carried over for a maximum of 20 consecutive tax years following the tax year in which the credit originated until fully expended.

(3) A taxpayer claiming a tax credit under this Section may transfer, for consideration, all or a portion of any unexpended tax credit which may be available to another taxpayer for use by such other taxpayer, as transferee, to apply as a credit against tax imposed by State law. Notice of such transfer and the amount of such tax credits so transferred shall be filed with the transferee's and transferor's tax returns, pursuant to rules that may be adopted to implement this Section.

(c) The tax credits provided by this Section shall apply to transfers of interests in land in taxable years beginning on or after January 1, 2025, and all taxable years thereafter.

(d) Any taxpayer claiming a tax credit under this Section may not claim a credit under any similar law for costs related to the same project.

(e) Any tax credits which arise under this Section from the donation of an interest in land made by a pass-through tax entity such as a trust, estate, partnership, limited liability corporation or partnership, limited partnership, S corporation, or other fiduciary shall be used either by such entity if it is the taxpayer on behalf of such entity or by the member, manager, partner, shareholder, or beneficiary, as the case may be, in proportion to their interest in such entity if that income, deductions, and tax liability passes through such entity to such member, manager, partner, shareholder, or beneficiary. Such tax credits may not be claimed by both the entity and the member, manager, partner, shareholder, or beneficiary for the same donation.

(f) In the case of a pass-through entity described in subsection (e), no qualified real property interest shall be eligible for a tax credit under this Section unless such entity acquired the land or qualified real property interest by purchase 3 or more years before the tax year in which a tax credit under this Section for the qualified real property interest is being sought.

(g) Subsection (f) shall not apply with respect to any gift of a qualified real property interest by any partnership or pass through entity for which a tax credit is being sought under this Section if substantially all of the partnership interests or pass through entity interests in such partnership or pass through entity are held, directly or indirectly, by an individual or by members of the family of such individual. In this subsection, "members of the family" means, with respect to any individual, the spouse of such individual, and any individual who bears a relationship to such individual as described in Section 152(d)(2) of the federal Internal Revenue Code, subparagraphs (A) through (G).

(h) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero.

(i) This Section is exempt from the provisions of Section 250.

(j) The Department of Natural Resources may adopt rules as may be deemed necessary in fulfillment of the purposes of this amendatory Act of the 104th General Assembly. The Department of Natural Resources, on or before the date that is 5 years after the effective date of this amendatory Act of the 104th General Assembly, shall prepare and submit a report to the General Assembly showing the lands protected during such period pursuant to this Act.

(k) The Department of Revenue, in consultation with the Department of Natural Resources, shall adopt rules as may be deemed necessary to administer the tax incentives provided for in this Section and shall coordinate with the Department of Natural Resources in the preparation of the report to the General Assembly under subsection (j) of this Section showing the fiscal impact on the State treasury of the credits claimed pursuant to this Act.

(l) No part or segment of this Section shall be interpreted to in any way alter or amend any permit requirements, reporting requirements, allocation procedures, or other requirements set forth in any other provision of State law.