The widespread effect of taxation on timberland management and reforestation decisions can never be overemphasized. The nature of forestry operations entails costly tree planting, half-a-generation of care and nurturing, and prolonged risk exposure from fire, storm, tree disease and insect damage. Yet the impact of taxing any gain from the eventual timber sales income can be very powerful: at capital gain tax rates, a landowner is required to pay 15% (2004) from the timber sales gains in taxes. Furthermore, timberland owners must annually pay another tax bill — property taxes. This tax can be a major expense without annual income to offset the cost.
Although tax laws provide special incentives for timber growers, many forest landowners are not aware of and are confused by the tax treatment on timber. Adding to this frustration is the fact that there are relatively few professional tax services offered in the timber tax area.
To serve the need and gap in timber tax assistance, Texas Forest Service provides timber tax education and training, conducts timber tax research and assesses the implications of timber tax laws and policies. Timber tax assistance, including timber income tax, timberland property tax and timber-related sales tax, is essential to ensure the healthy and sustainable development of timber resources in the state.
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