Conservation Tax Credit In NC: Who Is Eligible And How To Apply

North Carolina's new Conservation Tax Credit is an incentive created to encourage landowners and businesses to preserve valuable natural and cultural resources across the state. If you or your business has donated or is considering donating a real property interest for conservation purposes, here's a breakdown of what you need to know.

What is the NC Conservation Tax Credit?

The NC Conservation Tax Credit offers a nonrefundable tax credit against your North Carolina income tax when you make a qualified donation of a North Carolina real property interest for conservation purposes. The credit equals 25% of the fair market value of the donation, subject to statutory limits.

This credit applies only to donations made on or after January 1, 2025, and is available for taxable years beginning on or after January 1, 2025. Recent guidance issued by the North Carolina Department of Revenue in December, 2025 helps taxpayers understand how this tax credit will be applied by the Department.

Who Qualifies to Apply?

Those who make a qualified donation may apply whether you're:

• An individual;
• A pass-through entity (such as an LLC, partnership, S-Corp); or
• A C-Corporation.

A qualified donation refers to a donation of real property interest located in North Carolina that is donated in perpetuity for a qualifying use. The real property interest may be any of the following:

• The entire interest of the donor other than a qualified mineral interest;
• A remainder interest; or
• A restriction on the use of the real property granted in perpetuity (i.e., a "conservation easement").

Qualified uses of the donated real property interest must include:

• Forestland or farmland preservation;
• Fish and wildlife conservation;
• Historic landscape conservation;
• Floodplain protection;
• Public trail access; or
• Buffers to protect military training, testing, or operations.

These donations must be accepted by the State of North Carolina, a local government, or an organizational body legally able to hold such real estate interests.

What is the Application Process?

If you want to claim the credit, you must apply for certification from the North Carolina Department of Natural and Cultural Resources (NCDNCR), and then file a NC-74 Application Form with the North Carolina Department of Revenue along with any supporting documentation. Here is more information about the steps:

1. Apply for a NCDNCR certification of your donation

• Eligible taxpayers must apply to the NCDNCR to receive certification that their donations meet the conservation tax credit requirements. After submission, NCDNCR will review the application materials and notify the applicant of its decision. Application guidance and the application link can be found here. The deadline for certification of all donations made in 2025 is February 15, 2026.

2. File Form NC-74 and Supporting Documentation

• For any donations certified by the NCDNCR, the corresponding taxpayers must then file Form NC-74, Application for NC Conservation Tax Credit with the North Carolina Department of Revenue for each qualified donation.
• Along with Form NC-74, eligible taxpayers must provide supporting information demonstrating that the donation meets the qualifications, including:
  1. A copy of the NCDNCR certification that confirms the qualifying use of the donation, and
  2. An appraisal or summary appraisal report that supports the fair market value of the donation.¹

When and How to Apply

You must file your Form NC-74 Application between January 1 and April 15 of the year after the calendar year in which your donation was made. For example, if you donated land in 2025, your application must be filed between January 1, 2026 and April 15, 2026.

Eligible taxpayers may file online via the NCDOR website or by mail. If filing electronically, all supporting information must be uploaded at the time of submission and the application must be submitted on or before midnight on April 15.

If filing by mail, the application and supporting information must be sent via U.S. mail or delivery service and postmarked on or before April 15. The mailing addresses to send the documents via USPS and private delivery services are listed here.

Is There a Cap on Credits?

A maximum of $5,000,000 in total credits can be granted statewide per taxable year. Of that, $3,250,000 is prioritized for qualified forestland or farmland preservation donations.

Individuals may not receive more than $250,000 per year in credits for qualified donations and, if a married couple is filing jointly, the credits may not exceed $500,000. A pass-through entity and a C Corporation may not receive more than $500,000 per year in credits for their donations.

Once the application window closes, NCDOR will review applications and notify taxpayers of the amount of allocated tax credits including any applicable reductions by December 31 of the year following the donation.

How Do You Use the Credit to Reduce Your Taxes?

If you are awarded a tax credit, it can be claimed on your North Carolina tax return in the tax year beginning after your conservation tax credit application becomes effective. You'll receive instructions from NCDOR on how to claim the credit on your state return, and it's important to keep all documentation to support your claim.

For specific examples of the tax credit application process and more information about the conservation tax credit, please see the Directive TA-25-1 on the NCDOR website.

Footnote

1. For fee simple absolute donations of real property, taxpayers may submit the county's appraised value of the property interest in lieu of an appraisal report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.