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S930119th CongressWALLET

A bill to amend the Internal Revenue Code of 1986 to exclude from gross income capital gains from the sale of certain farmland property which are reinvested in individual retirement plans.

Sponsored By: Senator McConnell, Mitch [R-KY]

Introduced

Summary

Creates a way to shelter capital gains from the sale of family farmland by letting sellers lock those gains into retirement accounts. The bill would let a taxpayer exclude from gross income the portion of gain from selling qualifying farmland to a designated active farmer that is no more than what the seller contributes to an individual retirement plan during a 60-day window around the sale.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 1 benefits, 1 costs, 0 mixed.

Lower taxes when farmers sell land

If enacted, the bill would let a seller exclude from gross income the part of a capital gain from selling qualified farmland to a qualified farmer that is no more than the dollars the seller puts into an IRA during the 60-day period starting on the sale. You would have to make an election and file a written agreement that names the qualified farmer. "Qualified farmland" must be U.S. real property used as a farm for substantially all of the prior 10 years. The bill would also let you increase your yearly IRA contribution limit for the tax year by the smaller of certain farmland gains or the IRA dollars you put in during that 60-day window. These rules would apply to taxable years beginning after enactment.

Recapture tax and IRA rule for farms

If enacted, the bill would make the qualified farmer personally pay extra tax if they sell or stop using the land as a farm within 10 years. The extra tax equals the amount that was excluded times the highest capital gain tax rate plus the rate under section 1411, plus interest at the underpayment rate under section 6621 for prior years. Partial sales or partial cessations pay a prorated share. The bill would also bar a seller from taking an IRA deduction for contributions up to the excluded amount, so you could not get both tax benefits for the same dollars.

Sponsors & CoSponsors

Sponsor

McConnell, Mitch [R-KY]

KY • R

Cosponsors

  • Sen. Justice, James C. [R-WV]

    WV • R

    Sponsored 6/3/2025

  • Sen. Budd, Ted [R-NC]

    NC • R

    Sponsored 6/3/2025

  • Sen. Britt, Katie Boyd [R-AL]

    AL • R

    Sponsored 6/3/2025

  • Sen. Kennedy, John [R-LA]

    LA • R

    Sponsored 7/15/2025

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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