Across generations, American families have quietly stewarded 272 million acres of forestland — planting trees they may never live to harvest, trusting that the land will pass intact to those who follow. A proposed change to federal tax law, eliminating the stepped-up basis provision for inherited assets, threatens to sever that chain of stewardship by confronting heirs with tax bills so large that selling or over-harvesting becomes the only path forward. The question before policymakers is whether a tax code designed for fairness will, in practice, accelerate the fragmentation of the very land
Eliminating stepped-up basis threatens sustainable family forestry, experts warn
Forced early harvesting subverts the entire logic of sustainable forestry
Mark
Why does it take so long to grow timber? Why is that different from other investments?
Mimi
A timber rotation—the time from planting to harvest—can be 40, 50, even 60 years. You put money in the ground as seedlings and don't see a return until your children or grandchildren are adults. A stock investor gets quarterly reports. A timber owner gets one paycheck, decades later.
Mark
So stepped-up basis is really about fairness across time?
Mimi
Exactly. The law recognizes that you've held an asset for a very long time, and inflation and growth have happened. It would be unfair to tax all of that gain at once when it transfers. But it's also practical—without it, heirs can't afford to keep the forest intact.
Mark
What happens if they can't afford the tax?
Mimi
They sell pieces of the forest. Or they cut down trees before the forest is ready, just to raise cash. Either way, the forest gets broken up into smaller, weaker pieces. Wildlife loses habitat. The whole operation becomes less efficient.
Mark
Is this a new problem, or has it always been an issue?
Mimi
It's always been a tension, but stepped-up basis has protected family forests for generations. The proposal to eliminate it is new. And the proposed tax rate increase makes it much worse—we're talking potentially hundreds of thousands of dollars owed at the moment of inheritance.
Mark
Why do you think family farms got an exemption but forests didn't?
Mimi
People understand farms. They understand cows and crops and why you can't suddenly sell half your land to pay taxes. Forests are less visible. But the economics are identical. Both are long-term, land-based operations that depend on staying whole across generations.
Mark
What would sustainable forestry look like without this protection?
Mimi
Fragmented. Rushed. Forests managed for quick cash instead of long-term health. You'd lose the certification programs, the wildlife habitat, the careful harvesting schedules. You'd get development pressure instead.
The Pulse
- A proposed Biden administration tax change would eliminate stepped-up basis for inherited assets, potentially handing forest heirs six-figure tax bills the moment they receive the land.
- Family forests — supplying 90% of the nation's commercial timber from 272 million acres — operate on decades-long investment cycles that make sudden large tax obligations nearly impossible to absorb.
- Faced with bills that could exceed $300,000 on a single inheritance, heirs may be forced to sell off parcels or harvest timber years ahead of sustainable management schedules.
- Each forced sale or premature harvest chips away at forest continuity, fragmenting wildlife habitat, inviting development pressure, and unraveling certified sustainability programs built over generations.
- Forestry advocates argue timber operations face the same structural vulnerabilities as family farms — which have already been promised an exemption — and warn that without equal protection, a generation of careful stewardship could unravel.
Across generations, American families have quietly stewarded 272 million acres of forestland — planting trees they may never live to harvest, trusting that the land will pass intact to those who follow. A proposed change to federal tax law, eliminating the stepped-up basis provision for inherited assets, threatens to sever that chain of stewardship by confronting heirs with tax bills so large that selling or over-harvesting becomes the only path forward. The question before policymakers is whether a tax code designed for fairness will, in practice, accelerate the fragmentation of the very landscapes it touches — and whether timber, like farming, deserves recognition as a long-horizon enterprise that cannot be liquidated without consequence.
America's family forest owners — roughly 10 million of them — hold more forestland than all federal, state, and local governments combined. Their 272 million acres supply nearly 90 percent of the nation's commercial timber harvest, and most of these holdings have been passed down through generations, managed not for quick returns but for the long arc of a forest's growth.
The economics of timber are unlike almost any other enterprise. An owner plants seedlings, tends the land for decades, and only then harvests. Federal tax law has long accommodated this reality through stepped-up basis: when a forest owner dies, the inherited land is revalued at current market price, sparing heirs from capital gains taxes on appreciation that accumulated over a lifetime. Without it, a forest purchased for $500,000 and worth $2 million at the owner's death could generate a $300,000 tax bill — before a single tree is cut.
President Biden's proposal to eliminate stepped-up basis for most inherited assets includes a promised exemption for family farms, but forestry experts argue that timber operations face identical structural pressures and deserve the same protection. If the exemption does not extend to forestland, heirs confronting large tax bills would face a narrow set of bad choices: sell parcels to raise cash, or harvest timber ahead of schedule to generate income. Either path leads to fragmentation.
Fragmented forests lose more than acreage. Wildlife populations shrink, biodiversity declines, and the cost of management rises. Development pressure intensifies on land that was once held whole. Formal sustainability certifications — built over years of careful planning — give way to a patchwork of competing uses and shortened time horizons.
The deeper irony is that family forest owners have been among the most committed practitioners of sustainable forestry, driven by both market incentives and genuine stewardship values. Their forests produce timber, yes, but also clean water, wildlife habitat, and recreation — all compatible with responsible long-term management. A tax policy that forces liquidation in the name of fairness may, in practice, destroy in a single generation what took many to build.
Across America, roughly 10 million families own forestland. These holdings—272 million acres in total—represent the nation's single largest forest ownership group, dwarfing the combined acreage held by federal, state, and local governments. Nearly two-thirds of all private forestland belongs to these family operations, most of them small holdings passed down through generations. The timber industry depends almost entirely on these forests: they supply roughly 90 percent of the nation's commercial harvest.
But family forests operate under a peculiar economic constraint that few other businesses face. A timber grower plants seedlings, tends the land for decades, and only then harvests and sells. The initial investment comes first; the cash return arrives decades later. Federal tax law has long recognized this temporal mismatch as a fairness issue, allowing for what's called stepped-up basis—a provision that, when a forest owner dies, resets the value of the inherited land and timber to its current market price. The heir then calculates any future capital gains from that new, higher baseline. Critically, no capital gains tax is owed on the appreciation that occurred during the original owner's lifetime.
Consider a concrete example: an owner purchases forestland for $500,000. At death, it's worth $2 million. Without stepped-up basis, the heir would owe capital gains tax on that $1.5 million gain—at the current 20 percent rate, that's $300,000. President Biden has proposed eliminating stepped-up basis for most inherited assets, though he has promised to exempt family farms from the change. Forestry experts argue that timber operations deserve the same protection.
If stepped-up basis disappears and the capital gains tax rate rises to 39.6 percent as proposed, the tax bill at the moment of inheritance could become ruinous. An heir facing a six-figure tax bill would have limited options, none of them good. Some might sell off parcels of the forest to raise cash. Others might harvest timber before the forest management plan calls for it—cutting trees prematurely to generate immediate income. Both paths lead to the same outcome: the fragmentation and degradation of what was once a unified, sustainably managed forest.
Forest fragmentation is not merely an aesthetic loss. When a large forest tract is broken into smaller parcels, the resulting fragments cannot support the same wildlife populations or biodiversity. Smaller, isolated forests become harder and more expensive to manage. The pressure to convert forestland to other uses—residential development, commercial property—intensifies. A forest that was once managed under a formal sustainability certification program, like the American Tree Farm System, becomes a patchwork of competing interests and management approaches.
The irony is that family forest owners have largely embraced sustainable forestry as both an economic and environmental practice. The timber industry itself requires suppliers to manage on a sustainable basis, creating a market incentive for long-term stewardship. These forests produce not just timber but wildlife habitat, recreation opportunities, clean water, and aesthetic value—all compatible with responsible harvesting schedules. Forced early harvesting or forced sales would undermine decades of this careful work.
The argument for preserving stepped-up basis for timber is straightforward: family forests and family farms face identical structural challenges. Both are capital-intensive operations where the investment precedes the return by years or decades. Both depend on intergenerational transfer to survive as operating entities. Both would face existential pressure if heirs were forced to liquidate assets to pay inheritance taxes. The difference is that family farms have already been promised an exemption. Forestry experts warn that without the same protection, the nation's most productive and sustainably managed forests could be fragmented into dysfunction within a single generation.
Notable Quotes
Family forests and family farms face identical structural challenges and deserve identical tax protection for intergenerational transfer— Thomas J. Straka, professor emeritus of forestry, Clemson University
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