Sponsors (12)
The bill makes it substantially easier and less costly for owners to transfer farms to family—helping preserve family farms and rural livelihoods—but at the cost of reduced federal revenue and increased potential for tax avoidance and deferred tax burdens.
Rural families and small farm owners: eases intergenerational transfers so family farms can remain operational, supporting continuity of local agricultural businesses and livelihoods.
Farm owners who sell to qualifying family members: can exclude sale gains from taxable income, lowering their immediate federal tax liability.
Family members who keep the farm at least 10 years: receive a step-up in basis to fair market value above the transferred basis, reducing potential future capital gains tax if they later sell.
All taxpayers: the exclusion reduces federal income tax revenue, which could increase deficits or require offsetting spending cuts or revenue increases.
Taxpayers and the IRS: selling to family members could be used to shelter gains instead of selling at arm's-length, creating tax-avoidance opportunities and added administrative/enforcement complexity.
Taxpayers: the carryover-basis rule for up to 10 years defers taxable gain and may shift tax liabilities to future years or future taxpayers if the property later leaves the family.
Based on analysis of 2 sections of legislative text.
Excludes gain on sales of qualifying U.S. farm property to defined family members from gross income, with carryover basis and a conditional 10-year step-up.
Introduced April 30, 2026 by Thomas Massie · Last progress April 30, 2026
Excludes from taxable income the gain on sales or exchanges of qualifying U.S. farm real property when the buyer is a defined "qualified family member." The transferee generally takes the transferor's adjusted basis, but if the family member holds the property without disposing of it for 10 years, the basis is stepped up to fair market value to the extent it exceeds the transferred basis. The rule applies only to farm property owned and used by the seller for at least 2 of the prior 8 years and applies to transfers after enactment.