What is PILT?

Payments in Lieu of Taxes (PILT) are Federal payments to local governments that have certain Federal lands within their boundaries. The Office of the Secretary, Department of the Interior (DOI), administers the program, calculates the payments according to formulas established by law, and distributes the funds to local governments.

PILT payments help local governments carry out such vital services as firefighting and police protection, construction of public schools and roads, and search-and-rescue operations. To date, including the fiscal year (FY) 2024 payments, nearly $644.80 million (2025) in payments have been made to local governments. PILT payments may be used by local jurisdictions for any governmental purpose.

It is the most comprehensive Federal land payment program.

PILT: The Payments in Lieu of Taxes Act (31 U.S.C. §1601-1607), as amended by P.L. No. 103-397 and under guidelines prescribed in section 6907 of P.L. 97-258.

Why? because Federal lands may not be taxed by State or local governments unless authorized by Congress. Instead of authorizing taxation, Congress has usually chosen to authorize various payment programs designed to make up for the lost tax revenue. Under current law, local governments are compensated through various programs for losses to their tax bases due to the presence of most federally owned land.

The most widely applicable program, while run by the Bureau of Land Management (BLM), applies to many types of federally owned land, and is called “Payments in Lieu of Taxes” or PILT.

Lands eligible to receive these payments are primarily those in the National Forest System, the National Park System, those administered by Bureau of Land Management (BLM), the lands reserved from the public domain in the National Wildlife Refuge System, and a few other categories of Federal lands.

There have been two chief issues concerning PILT:

1. How to account for annual inflation and
2. How to calculate a fair value to the lost revenue

In times of increasing federal debt, PILT has become a fierce battle for every dollar and cent.

Calculating a fair value is based on the standard of comparison: payment level per capita, the tax value of the land if it were in private ownership, the direct and indirect benefits the county received from the presence of Federal land, etc. Payments often differ markedly (higher or lower) from amounts that would be paid if the lands were simply taxed at fair market value.

Any change in the formula is considered a very contentious issue – since it would create new winners and losers and thus less consensus.

Eligibility for payment under the PILT program is reserved for local governments (usually counties) that provide services such as those related to public safety, environment, housing, social services, and transportation. Payment is made directly to the eligible local government unless the state government chooses to enact legislation (under guidelines prescribed in section 6907 of P.L. 97-258) to receive the payments and, in turn, pass the money on to other smaller governmental units located within the counties (Wisconsin is the only State currently employing this option).

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