PILT — Payments in Lieu of Taxes for Federal Land

Counties and local governments that contain federal land — national parks, national forests, Bureau of Land Management land, wildlife refuges, and water project areas — can't collect property taxes on that land because the federal government is tax-exempt. Payments in Lieu of Taxes (PILT) compensates for this: the federal government makes annual payments to eligible local governments based on the acreage of federal land within their boundaries. In fiscal year 2023, PILT distributed approximately $588 million to more than 1,900 local governments in 49 states, the District of Columbia, and territories — with rural western counties receiving the largest payments because they contain the most federal land relative to their total area.

Current Law (2026)

Legal Authority

• 31 U.S.C. § 6901 — Definitions: "entitlement land" = federal land in NPS, NFS, BLM, water project areas, military withdrawals, wildlife refuges; "unit of general local government" = county or equivalent
• 31 U.S.C. § 6902 — Authority and eligibility: Interior Secretary makes annual payments to each local government containing entitlement land; Alaska receives payments for land within unorganized boroughs; no eligible government is excluded; payments are for any governmental purpose
• 31 U.S.C. § 6903 — Payment calculation: payments are based on a formula comparing current PILT entitlement to prior payments received under older payment laws (forest receipts, Bankhead-Jones farm tenant lands, Migratory Bird Conservation Fund lands, Federal Power Act); PILT fills the gap or provides the full payment where no prior law applies
• 31 U.S.C. § 6904 — Additional payments: when the federal government acquires new land for national parks or national forest wilderness areas that was previously on local property tax rolls, a transitional additional payment offsets the lost tax revenue
• 31 U.S.C. § 6905 — Special provisions for Redwood National Park and Lake Tahoe Basin: specific payment rules for these congressionally designated areas
• 31 U.S.C. § 6907 — State reallocation authority: states may pass legislation redistributing PILT payments from the county level to smaller units of local government (towns, townships) within the county that also contain federal land

How PILT Works

The core problem PILT solves: Federal land generates no property tax revenue for local governments. A county that is 90% federal land — common in the rural West — cannot fund schools, roads, sheriffs, and emergency services from property taxes on private land that makes up only 10% of its area. Federal agencies don't pay property taxes, don't pay school levies, and don't contribute to county infrastructure funds. PILT is the federal government's acknowledgment that hosting federal land imposes a fiscal burden on local communities.

Entitlement land calculation: The payment for each county is based on the total acres of qualifying federal land within the county's boundaries. BLM tallies these acres annually and submits them to Interior for payment calculation.

The relationship to other payment laws: PILT exists alongside an older system of "payment laws" that share specific revenue streams with local governments:

• National Forest counties receive 25% of forest receipts (timber sales, grazing fees, etc.) under the Secure Rural Schools Act
• Wildlife refuge counties receive 25% of refuge receipts
• Federal Power Act counties receive a share of hydropower license fees

PILT is calculated after accounting for these other payments. If a county receives substantial forest receipts, its PILT payment is reduced accordingly. The goal is to ensure a minimum level of compensation rather than to stack PILT on top of all other federal land payments.

No use restrictions: Unlike many federal grant programs, PILT payments come with no strings attached. Counties use PILT for whatever local needs are highest priority — road maintenance, school funding, law enforcement, emergency services. This flexibility makes PILT particularly valuable to rural local governments.

How It Affects You

If you live in a rural western county, PILT is probably a significant part of your county's revenue base. In counties like Park County, Wyoming, or Lincoln County, Nevada — where federal land exceeds 80-90% of total area — PILT and related federal land payments may fund a quarter or more of the county budget. When PILT appropriations are cut or eliminated (as happened temporarily in 2013 during the sequester), these counties face immediate fiscal stress.

If you're a county commissioner or local official in a PILT-receiving county: PILT is an annual entitlement subject to congressional appropriation — it's not guaranteed and has been subject to funding gaps when Congress has failed to act on appropriations bills (most notably in 2013 during sequestration). Advocacy for consistent PILT funding is an ongoing obligation for western county associations. Monitor the Interior appropriations bill each year; underfunding PILT creates immediate fiscal stress in counties where federal land dominates the tax base. The National Association of Counties (NACo) tracks PILT appropriation levels and provides advocacy resources.

If you're an environmental advocate or public lands researcher: There's a genuine policy tension here — adequate PILT payments reduce local opposition to federal land ownership and conservation designations (see Public Lands Management for the broader legal framework). Counties that receive adequate PILT compensation are measurably less likely to push for federal land sales, transfers to state ownership, or reduced conservation designations. From an advocacy perspective, supporting robust PILT funding is not just a rural equity argument — it's a practical tool for maintaining public land protections against county-level pressure for privatization or state transfer.

If you're in a national park gateway community: The 2004 PILT reform established a formula-based entitlement rather than the older discretionary payment system, providing more predictability. But national park gateway communities remain in a difficult fiscal position — your local roads, emergency services, and utilities support millions of park visitors annually, while you receive no tourism-related tax revenue from the park itself. Advocate for full PILT funding and track whether your county's formula-based payment reflects actual acreage and population; under-reporting of eligible acreage has historically reduced payments for some counties.

State Variations

PILT is a federal program, but states may pass legislation (under § 6907) directing how payments to counties are further distributed within the state. Some states require counties to share PILT with townships and smaller municipalities that also contain federal land.

Pending Legislation

No major structural changes pending as of 2026. Congress periodically debates whether to make PILT a mandatory (rather than discretionary) appropriation, which would eliminate the risk of funding gaps. The Secure Rural Schools Act — which supplements PILT for national forest counties — has been reauthorized multiple times after expiration and remains a perennial appropriations issue.

Recent Developments

• IIJA multi-year PILT appropriation expiring — returning to annual uncertainty: The Infrastructure Investment and Jobs Act (2021) provided approximately $588 million per year for PILT with multi-year funding certainty through FY2024. As IIJA PILT appropriations expire, counties in federally land-heavy states — Wyoming, Nevada, Idaho, Montana, Utah, Colorado — face the return of annual appropriations uncertainty that has historically caused mid-year budget adjustments and service disruptions. FY2025 and FY2026 PILT appropriations are subject to annual congressional action, and the Trump administration's DOGE-driven discretionary spending cuts targeted multiple federal payments-to-state programs. Mandatory funding advocates have reintroduced the PILT Certainty Act without success.
• Trump "energy dominance" agenda creating PILT revenue volatility: Federal mineral lease revenues — royalties from oil, gas, and coal production on federal lands — partially fund PILT through the formula in 31 U.S.C. § 6902. The Trump administration's push to expand federal land energy leasing in 2025-2026 has generated higher royalty revenues, which in some formulations could reduce PILT payments (since PILT is structured as a substitute for tax revenue, not additive to mineral revenues). Western counties are tracking whether increased federal energy production on their land will translate to more or less total federal payment under the combined PILT/mineral revenue formula.
• Secure Rural Schools reauthorization lapsing — timber counties at risk: The Secure Rural Schools and Community Self-Determination Act (SRS), which funds counties with national forests based on historic timber receipts, has required periodic reauthorization and has lapsed multiple times since 2008. Timber-dependent counties in Oregon, Washington, California, Idaho, and other western states depend on SRS payments as a material portion of their budgets. As of April 2026, SRS reauthorization status is uncertain; counties are actively lobbying for permanent authorization. Forest Service timber sale volumes — depressed by environmental litigation and wildfire management priorities — directly affect SRS payment calculations.
• Permanent mandatory PILT proposed in reconciliation — unlikely to pass: Advocates for federal land counties have attempted to include mandatory PILT funding in budget reconciliation legislation, which would remove PILT from annual appropriations uncertainty. The One Big Beautiful Budget Act (OBBBA) did not include mandatory PILT, despite rural state Republican support. The fundamental barrier is that mandatory PILT requires an offset elsewhere in the budget — making it a spending fight that appropriators resist placing in reconciliation. The gap between annual PILT appropriations ($500–600M) and the full statutory formula payment ($900M+) represents hundreds of millions in annual underpayment to western counties.