Income Tax Depletion Allowance

The High Plains Water District provides data to support landowners’ claims for a cost-in-water depletion allowance on federal income taxes. The allowable annual depreciation is directly related to measured changes in water levels in a network of about 1,400 privately-owned observation wells within HPWD’s 16-county service area. HPWD contracts with a professional land appraiser who documents land sales within the district each year. An average per-acre sales value for dryland and irrigated land is determined.

In addition to saving money, this program provides landowners with an annual ‘bank statement’ which reminds them that their groundwater reserves are being depleted. As a result, many landowners have implemented better water conservation practices on their farms to improve irrigation application efficiency and scheduling.

Depletion Quick Facts:

  • Taxpayer must have paid more for a tract of land because it had groundwater in storage

  • Based on annual depreciation

  • Directly related to the Internal Revenue Service (IRS) approved annual decline in water levels for individual tracts of land

  • HPWD contracts with a professional land appraiser

  • HPWD set up fee cost is $10

  • Provides an annual water “bank statement” to landowner

Cost-in-Water Values for New Land Acquisitions

2018 Report

2017 Report

2016 Report

2015 Report

2014 Report

For more information, contact Jed Leibbrandt.
If this is your initial request, download the cost-in-water income tax depletion allowance form here.
If you have previously requested this service, download the reorder request form here.