The Idaho Tax Commission is considering eliminating one of two logging exemptions, which could affect small-scale timber operations. 

Mom-and-pop loggers sometimes don’t realize that they will have to pay a tax at the time of harvest or if the land use changes, Kootenai County Timber and Agriculture Department Forester Colton Smith said. 

“They come in and they’re mad about it because they got a tax bill,” Smith said. “They signed up for it and it’s in the fine print, but they forgot.” 

If the forest acreage in a parcel ranges from five to 5,000, forest landowners are allowed to choose between the productivity exemption and a bare land and yield exemption, according to the Idaho Tax Commission. 

Landowners with tracts of 5,000 acres or more statewide are taxed under the productivity system. Forest landowners with less than five acres are assessed at the property’s market value.    

The bare land and yield exemption may seem like the more attractive option for a landowner who already has heavily logged land and doesn’t anticipate harvesting trees for some time, because it reduces the annual cost as the deferment applies until tree harvest. Instead of being more than $500 as it is for the productivity exemption, it’s about $160 an acre in property taxes.   

Idaho has about 34,000 owners of small woodlands. 

Smith said that multiple assessors have flagged the lack of public awareness on the topic to state officials.

“The state tax commission is talking about it,” Smith said. “They want to make the change to help across the whole state.”  

The state’s five-year rolling average of timber calculations determines the figure, which changes year to year.   

“The $160 rate to a landowner seems like a great deal, but if they ever log their property, it says in the Idaho code that they owe 3% of the yield of that volume that they logged,” Smith said.  

If a landowner makes $100,000 off their timber, then they owe the county $3,000.  

The bare land and yield system also allows the state to recapture deferred taxes if the property's land use changes.     

A deferred tax comes due if the land is sold and the new owner removes or changes the designation. The deferred taxes may be assessed over a period of up to 10 years.  

“People don’t like that, either,” Smith said.

The state Committee on Forest Taxation Methodology (CFTM) issued a recommendation to the Idaho Tax Commission on Jan. 7 regarding challenges county assessors encountered, whether in smaller parcels, timber is being grown to harvest ultimately, rather than as an “aesthetic amenity.” 

The committee pointed out that five- to 20-acre parcels have dramatically increased in number over the past several decades and that difficulties have emerged in classifying forest land. 

“The unanimous consensus of the CFTM is to allow assessors to require a timber management plan to qualify for the timber production classification,” the recommendation stated.