No Capital Gains Tax on Family Farms Act

Bill Number

H.R. 8591

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-04-30: Referred to the House Committee on Ways and Means.

Last Updated

2026-05-13T08:06:01Z

AI-Generated Summary

Purpose

The "No Capital Gains Tax on Family Farms Act" (H.R. 8591) aims to make it easier for family farmers to pass their farms to relatives by eliminating federal capital gains taxes on the profit from such sales. (Capital gains tax is a tax on the profit from selling an asset that has increased in value.)

Key Provisions

• Tax Exclusion: Profit from selling or exchanging qualified farm property to a qualified family member is not included in taxable income.
• Qualified farm property: U.S. real estate (land and buildings) owned and actively used for farming for a total of at least 2 years within the 8 years before the sale. "Farming" follows the definition in existing tax law (Section 2032A(e)), which includes crop or livestock production.
• Qualified family member: Spouse; lineal descendants (children, grandchildren, etc.) of the seller, seller's spouse, seller's parents, or spouse's parents; or the spouse of such descendants. Adopted children count the same as biological children.
• Basis Rules (Basis is the original cost of the property for tax purposes):
• The buyer's basis starts as the seller's adjusted basis (carryover basis).
• If the family member holds the property for 10 years without selling or disposing of it, the basis increases to the property's fair market value at the time of the original family sale (step-up in basis).
• Other Rules:
• Taxpayers can elect to opt out of this exclusion.
• The IRS Secretary can issue regulations to implement the law, including partial sales.

Significant Changes to Existing Law

• Adds a new Section 121A to the Internal Revenue Code, right after the existing home sale exclusion (Section 121).
• Introduces a targeted capital gains exclusion for family farm transfers, which does not currently exist. Previously, such sales were fully taxable on any profit above the seller's basis.
• Applies to sales after the date of enactment.

Potential Impacts

• Citizens: Reduces tax burden on family farmers transferring property to relatives, potentially preserving family-owned farms and lowering estate planning costs.
• Government Agencies: IRS will administer the exclusion, including verifying farm use and family relationships; may lead to short-term revenue loss from untaxed gains but encourage long-term farm continuity.
• International Relations: None apparent.

Main Stakeholders Affected

• Family farmers and their heirs: Primary beneficiaries, enabling tax-free transfers.
• IRS and Treasury Department: Responsible for enforcement, audits, and regulations.
• General taxpayers: Indirectly affected via potential federal revenue reduction.

Notable Legal, Constitutional, or Political Implications

• Legal: Mirrors existing exclusions (e.g., home sales) with carryover basis and step-up after holding period to prevent abuse; relies on IRS guidance for edge cases like partial sales.
• Constitutional: No clear challenges; fits Congress's taxing power under Article I.
• Political: Supports agricultural family businesses; bipartisan sponsors signal appeal across rural interests, but could spark debate on tax fairness for non-family farms.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Massie, Thomas [R-KY-4]

Cosponsors (11)

Rep. Perez, Marie Gluesenkamp [D-WA-3], Rep. Roy, Chip [R-TX-21], Rep. Davidson, Warren [R-OH-8], Rep. Burchett, Tim [R-TN-2], Rep. Boebert, Lauren [R-CO-4], Rep. Mace, Nancy [R-SC-1], Rep. Edwards, Chuck [R-NC-11], Rep. Burlison, Eric [R-MO-7], Rep. Collins, Mike [R-GA-10], Rep. Fedorchak, Julie [R-ND-At Large], Rep. Perry, Scott [R-PA-10]

Recent Actions

• 2026-04-30: Referred to the House Committee on Ways and Means.
• 2026-04-30: Introduced in House
• 2026-04-30: Introduced in House

Bill Versions

• No Capital Gains Tax on Family Farms Act — issued 2026-04-30 — PDF (5 pages)