The Tree Growth Tax is a municipal tax on the productivity of the land to grow timber, rather than the fair market value. You need to have at least 10 acres of forest land used primarily to grow trees for commercial use. There needs to be unanimous consent of all owners of the land. The value of recreational leases cannot be greater than the tree growth value for parcels greater than 100 acres. Forest land cannot be excluded from Tree Growth Tax Law registration due to the following conditions:

• Public recreational use
• Government restrictions on harvesting
• Deed restrictions, restrictive covenants, or organizational charters restricting harvesting that were effective before 1982
• Mineral exploration

Filing of the application occurs with the municipal tax assessor or state tax assessor for the unorganized territories. Filing needs to occur before April 1st to receive this tax treatment for the current year. Separate parcels require separate applications. Separate applications are also necessary for each part of a parcel in a different municipality to the municipality the part is in.

Each application needs to include a forest management plan prepared by or reviewed and certified by a licensed professional forester and a forest type map of the parcel. The forest type map separates timber into three categories: softwood, hardwood, and mixedwood (see Definitions). The management plan is a written document recommending and scheduling activities to regenerate, improve, and harvest timber. Locations of water bodies and significant wildlife habitat (identified by Inland Fisheries and Wildlife) need to be in the plan. Once every 10 years, landowners in Tree Growth are allowed up to a $200 Maine income tax credit for the cost of the management plan. Also every 10 years, a new forest management plan needs to be submitted to stay in Tree Growth. An owner may need to refile the application, upon request of the state. Owners also need to report changes of land use in a parcel to the state. When ownership of a parcel changes, a new forest management plan needs to be submitted within one year or the new owner can resubmit the old plan. An application is called the "Schedule for Classification of Land as Forest Land". It asks for the following information:

• Names of all owners or name of the authorized agent, and type of ownership (joint tenant, 1.10 in common and undivided etc.)
• Address(s) of owner or agent
• Parcel location
• Tax map and lot number, or reference of page number for the deed in the town registry
• Whether there are structures on the property
• First year under current use tax (Farm, Open Space, Tree Growth)
• Acres by forest type (softwood, hardwood, mixed) in commercial timber production
• Total acres in commercial forest production
• Acres of different types of land uses
• Water , wetland, agriculture, gravel, road right of way, transmission lines, residential, non-commercial forest
• Total acres not used for commercial timber production
• Total acerage of parcel
• Choose the one of three categories that applies
1. Grandfathered: If parcel was classified for former Tree Growth law (before September 30,1989), parcel must have a forest management plan by April 1, 1999
2. New parcel or management plan: Include name and identification number of licensed professional forester
3. Recertification: Show compliance with management plan as approved by licensed professional forester. Include name, identification number, and signature of licensed forester along with the inspection date.

Non-commercial forest land in the parcel is taxed at the locally assessed rate. If a natural disaster (wind, fire, ice) decreases the volume to less than 3 cords per acre of merchantable wood, Tree Growth taxation is reduced by 75% for 10 years following the loss.

Penalty For Withdrawal

If the owner changes the land use of commercial forest land or withdraws it from Tree Growth, there is a penalty to the owner. There is no penalty if the land is being transferred to Farm Land or Open Space taxation categories. If the forest land is subdivided for development and then new parcels are less than 10 acres, the penalty is assessed to the new owner.

The penalty is 30% of the difference between the fair market value of the land and the valuation under Tree Growth. Fair market value is obtained from the values of comparable properties. If the owner does not report a change in land use the penalty is increased 25%. As the number of years that the parcel has been registered under the Tree Growth Tax Law increases, the percentage used to calculate the penalty decreases as follows: