Policy and Ordinances

Navigating forest finances, taxation, and timber sales can be a complicated process. Access Penn State Extension’s educational resources to learn more about forestry business and economics, forest policy, and timber ordinances. Information is also available on understanding timber taxation and property tax assessment.

Forest Policy and Ordinances

In Pennsylvania, forests cover more than 60% of the state. These 17 million acres of woodlands contribute significant benefits, such as protecting drinking water and providing wildlife habitats. What’s more, the state is one of the leading producers of hardwood timber in the country.

Forest policy incorporates laws and regulations – as negotiated between government and stakeholders – to manage and protect forests nationwide. Townships, boroughs, and counties in Pennsylvania are authorized by the Municipalities Planning Code to administer local land use planning.

Currently, timber harvesting in PA is regulated by a fraction of the state’s local governments. Ordinances have been developed to regulate timber harvest activities and maintain the state’s woodlands for future generations. These ordinances may include provisions requiring harvest plans and permits, as well as silvicultural regulations.

With the increase of residential development, more municipalities may begin to regulate timber harvest. Learn more about Pennsylvania forest policy and ordinances in the Dealing with Local Timber Harvesting Ordinances publication. Information is also available on recent forestry amendments and local government structures, as well as developing and applying for a timber harvesting permit.

Forest Finances and Timber Tax Laws

Timber harvesting and woodland stewardship provide valuable economic benefits to Pennsylvania communities. As most of PA forests are privately owned, landowners are obliged to pay the appropriate forest-related taxes, usually income taxes and annual property taxes.

Regardless of the forest’s main purpose, woodland management plans may eventually require commercial timber harvest. Landowners harvesting and selling timber are required to pay taxes for the expected returns from the land. The income from these sales is generally subject to income tax; however, it may be taxable as a long-term capital gain.

Property taxes in PA are typically based on the market value of the property. Eligible forest owners, however, can enroll in the Clean and Green preferential tax assessment program. The program aims to prevent landowners from selling or converting their land to other uses due to pressure from rising real estate taxes. The Clean and Green program provides tax relief by assessing values based on use values reflecting the land’s productive capability.

Forestry taxation can be a complex process, which is why working with professionals and gaining a better understanding of the importance of forest tax and financial planning is crucial.

In this section, find valuable Penn State Extension resources, including the Forest Finance and Timber Tax Education course. This online course is specially designed to help participants understand the tax code and how it applies to forests and woodlots. It further offers reputable sources, as well as practical advice for managing records and estate planning.