H.R. 6836

[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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