Starting in 2026, Colorado farmers and ranchers will have a new way to receive compensation for their environmental stewardship and sustainable land management practices. The Colorado Department of Agriculture (CDA) announced that applications for the Agricultural Stewardship Tax Credit will open on November 10. This program offers a refundable state income tax credit to producers who implement practices aimed at improving soil health, increasing water efficiency, and supporting diverse ecosystems.
Governor Jared Polis commented on the initiative: “Agriculture is an important part of our economy and way of life. Our farmers and ranchers are true stewards of our lands and this tax credit supports their efforts to improve soil health, protect our water resources and more. I hope that farmers and ranchers around the state will take advantage of this funding opportunity.”
Under the legislation authorizing the program, agricultural producers can receive up to $300,000 per year in tax credits for up to three years. The amount is determined by the number and type of stewardship practices implemented as well as the acreage affected. CDA expects to distribute $3 million annually in tax credits through this program. Producers applying in November must carry out their chosen practices throughout 2026, with credits applied to their 2026 state income taxes.
Evanne Caviness, Director of CDA’s Conservation Services Division, said: “The value of these practices extends beyond improved farm viability for producers, benefiting the entire state through improved soil health, water retention and quality, and biodiversity. The tax credit incentive for Colorado’s agricultural producers to invest in stewardship practices is a testament to our state’s commitment to supporting sustainable and resilient agriculture.”
Seventeen different stewardship practices qualify for the tax credit. These include annual options such as no- or minimized-till farming or managed grazing, as well as perennial approaches like overseeding or virtual fencing. Practices involving nutrient or irrigation management are also eligible. Producers may combine different options based on what best fits their operations.
In preparation for launching the program, CDA collaborated with agricultural stakeholders over the past year to ensure that eligible practices reflect producers’ preferences for stewarding their land. The list was designed to address Colorado’s diverse agricultural industry while promoting soil health and sustainability without sacrificing economic profitability.
To help interested applicants understand the process, CDA will hold two informational webinars presenting details about the program and guiding participants through application steps:
– October 9th at 10 am
– October 16th at 6 pm
Registration information is available via Zoom or on CDA’s website where potential applicants can also find more details about qualified practices and use a calculator tool to estimate possible tax credit amounts.
The Agricultural Stewardship Tax Credit supports CDA’s broader strategic focus on environmental stewardship and climate resilience as outlined in its Strategic Plan for 2024-2027. This direction emphasizes addressing environmental challenges by encouraging voluntary adoption of regenerative agriculture techniques and advancing water resilience.
