H.R. 6836

119 HR 6836 IH: Beginning Farmer Tax Incentive Act
 U.S. House of Representatives
 2025-12-18
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 I  119th CONGRESS
  1st Session  H. R. 6836  IN THE HOUSE OF REPRESENTATIVES   December 18, 2025   Mr. Alford  introduced the following bill; which was referred to the  Committee on Ways and Means    A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income certain gains and other income related to use of farmland by beginning farmers.
1.
Short title
This Act may be cited as the   Beginning Farmer Tax Incentive Act  .
2.
Certain gains and other income related to use of farmland by beginning farmers excluded from gross income
(a)
In general
Part III of subchapter B of  chapter 1  of the Internal Revenue Code of 1986 is amended by inserting after section 139L the following new section:
139M.
Certain gains and other income related to use of farmland by beginning farmers
(a)
Capital gains
(1)
In general
Gross income shall not include 40 percent of the gain from the sale or exchange of qualifying farmland held for more than 1 year if such farmland is transferred to a beginning farmer in such sale or exchange.
(2)
Limitation
The aggregate amount of gain excluded under paragraph (1) with respect to any taxpayer for any taxable year shall not exceed the excess (if any) of—
(A)
$1,500,000, over
(B)
the aggregate amount of gain excluded under paragraph (1) with respect to such taxpayer for the 4 preceding taxable years.
(b)
Application to leases and crop-Share arrangements
(1)
In general
Gross income shall not include income from the lease or rental of qualifying farmland to a beginning farmer if the term of such lease or rental agreement is for a period not exceeding 10 years.
(2)
Limitation
The amount excluded under paragraph (1) by any taxpayer for any taxable year shall not exceed $25,000.
(c)
Qualifying farmland
(1)
In general
The term  qualifying farmland  means property—
(A)
used as a farm for farming purposes (within the meaning of section 2032A(b)(2)(A)), and
(B)
with respect to which, during the 8-year period ending on the date of the sale or exchange described in subsection (a)(1) (or, for purposes of subsection (b)(1), the date of the lease or rental), there have been periods aggregating 5 years or more during which—
(i)
such real property was owned by the taxpayer, a member of the taxpayer’s family, or the taxpayer’s revocable grantor trust, and used in the operation of a farm, and
(ii)
there was material participation by the taxpayer or a member of the taxpayer’s family in the operation of the farm.
(2)
Member of the family
For purposes of this subsection, the term  member of the family  has the same meaning given such term in section 409(p)(4)(D).
(3)
Special rules
For purposes of paragraph (1)(B)—
(A)
Taxpayers who are retired or disabled
Rules similar to the rules of subparagraphs (A) and (B) of section 2032A(b)(4) shall apply.
(B)
Surviving spouses
Rules similar to the rules of section 2032A(b)(5) shall apply.
(d)
Beginning farmer
For purposes of this section—
(1)
In general
The term  beginning farmer  means any individual who—
(A)
is a citizen of the United States, and
(B)
is certified by the Secretary of Agriculture (the Secretary, in the case of clause (i)) to satisfy one of the following requirements:
(i)
Without regard to any taxable year beginning before such individual attained age 18, such individual had income or loss properly reported on Schedule F for not less than 1 and not more than 10 taxable years.
(ii)
Such individual is approved for a beginner farmer loan through the Farm Service Agency Beginning Farmer direct or guaranteed loan program.
(iii)
Such individual has substantial farming knowledge and is the principal operator of a farm that constitutes new production agriculture.
(iv)
Such individual is related within the fourth degree by blood, marriage, or adoption to the taxpayer from whom the farmland referred to in subsection (a) or (b) is acquired, leased, or rented.
(2)
Application to business entities
The term  beginning farmer  shall include any corporation or partnership if more than 50 percent of the equity interests in such corporation or partnership are held (directly or indirectly) by one or more individuals described in paragraph (1).
(e)
Aggregation rules
Rules similar to the rules of section 194(b)(2) shall apply for purposes of subsections (a)(2) and (b)(2) of this section.
(f)
Recapture
(1)
In general
If any amount is excluded from the gross income of the taxpayer with respect to the sale or exchange of qualifying farm land and such qualifying farmland ceases to be used as a farm for farming purposes (within the meaning of section 2032A(b)(2)(A)) during the 5-year period beginning on the date of such sale or exchange, the tax imposed under this subtitle on such taxpayer for the taxable year which includes the date of such cessation shall be increased by the applicable percentage of the taxpayer’s tax benefit with respect to such sale or exchange.
(2)
Applicable percentage
For purposes of this subsection, the term  applicable percentage  means—
(A)
100 percent in the case of the first year of the 5-year period referred to in paragraph (1),
(B)
80 percent in the case of the second year of such period,
(C)
60 percent in the case of the third year of such period,
(D)
40 percent in the case of the fourth year of such period, and
(E)
20 percent in the case of the fifth year of such period.
(3)
Tax benefit
For purposes of this subsection, the term  tax benefit  means, with respect to any sale or exchange, the excess of—
(A)
the tax imposed under this subtitle for the taxpayer’s taxable year which includes the date of such sale or exchange, determined without regard to this section, over
(B)
such tax determined after the application of this section.
 .
(b)
Clerical amendment
The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item:
Sec. 139M. Certain gains and other income related to use of farmland by beginning farmers.
  .
(c)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
(d)
Annual reports to Congress
The Secretary of the Treasury, or the Secretary’s delegate, shall annually submit to Congress a written report reviewing the costs and benefits and containing statistical information regarding the exclusion of income under  section 139M  of the Internal Revenue Code of 1986 (as added by this section). Such report shall include the total amount of income excluded under such section, and the total number of taxpayers excluding such income, for the taxable years covered by such report.