[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6836 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 6836
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.
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Beginning Farmer Tax Incentive
Act''.
SEC. 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:
``SEC. 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.
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