Sponsors
The bill incentivizes transfers and leases of farmland to beginning farmers through tax exclusions that improve land access and rural renewal, but it reduces federal revenue and creates compliance complexity and potential recapture risks that can produce financial uncertainty for sellers.
Sellers of qualifying farmland can exclude 40% of long-term capital gain when transferring land to a beginning farmer, lowering their federal tax bill on such sales.
Beginning farmers and rural communities gain improved access to farmland and greater prospects for generational renewal because owners are incentivized to transfer or lease land to new farmers.
Landowners who lease qualifying farmland to a beginning farmer for up to 10 years can exclude up to $25,000 per year of rental income from tax, reducing taxable rental income.
Federal government and taxpayers face reduced federal revenue because exclusions lower tax receipts, which could increase deficits or crowd out funding for other programs.
Sellers may face a significant tax recapture if the transferred or leased land stops being used as a farm within five years, creating financial uncertainty and potential large tax bills in the cessation year.
Taxpayers and tax administrators face added complexity from eligibility, aggregation, and recapture rules, increasing compliance burdens and IRS administrative costs.
Based on analysis of 2 sections of legislative text.
Introduced December 18, 2025 by Mark Alford · Last progress December 18, 2025
Creates a tax exclusion for certain transfers and leases of farmland to certified "beginning farmers." It lets landowners exclude 40% of long-term capital gain on qualifying farmland sales to beginning farmers (subject to a per-taxpayer rolling cap) and exclude up to $25,000 per year of rental income when leasing qualifying farmland to a beginning farmer for leases up to 10 years. The measure sets detailed eligibility rules for what counts as qualifying farmland and who is a beginning farmer, applies a 5-year recapture if the land stops being farmed, and requires annual Treasury reporting on costs and use of the exclusions.