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HR 8591

No Capital Gains Tax on Family Farms Act

119th Congress Introduced by Lauren Boebert and 10 co-sponsors

Excludes gains from sale of qualified farm property to a qualified family member from gross income, with a 10-year step-up basis and optional opt-out.

Introduced in House
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WeVote Research Nonpartisan
Bill Summary · HR 8591

Summary of H.R. 8591 — No Capital Gains Tax on Family Farms Act

Date introduced: April 30, 2026
Committee: Ways and Means (House)
Sponsored by: Rep. Massie (lead), with multiple co-sponsors

1) Purpose and Intent

The No Capital Gains Tax on Family Farms Act aims to provide an exclusion from gross income for gains realized from the sale or exchange of certain farm property when sold to qualified family members. In short, it would eliminate capital gains tax (for the excluded portion) on transfers of qualifying farm property between a taxpayer and their close family members.

2) Key Provisions and Changes

  • New Tax Provision Created: Adds a new Section 121A to the Internal Revenue Code, creating an exclusion from gross income for gains on the sale or exchange of “qualified farm property” sold to a “qualified family member.”

  • Qualified Farm Property (Definition):

    • Real property located in the United States.
    • Must have been owned and used as a farm for farming purposes (as defined by section 2032A(e)) for at least 2 years within the 8-year period ending on the sale date.

  • Qualified Family Member (Definition):

    • Spouse of the taxpayer.
    • Lineal descendants of the taxpayer or of the taxpayer’s spouse, or the parents of the taxpayer or of the taxpayer’s spouse.
    • The spouse of any lineal descendant described above.
    • Legally adopted children are treated as natural children for purposes of these definitions.

  • Exclusion from Gross Income (Section 121A(a)):

    • Gains from the sale or exchange of qualified farm property to a qualified family member are not included in gross income.

  • Special Basis Rules (Section 121A(c)):

    • Basis Transfer: The basis of the qualified farm property in the hands of the qualified family member is the same as the taxpayer’s adjusted basis immediately before the sale or exchange.
    • 10-Year Step-Up/Adjusted Basis Provision: If the property remains with the qualified family member and is not disposed of for 10 years after the sale, the basis of the property in the family member’s hands increases. The increase equals the excess of:
    • The fair market value (FMV) of the property on the date of the sale, over
    • The family member’s basis (as determined under subparagraph (A)).
    • Elective Provision: Taxpayers may elect to not apply Section 121A in a manner similar to the provisions of Section 121(f) (i.e., there would be an option to opt out of this exclusion in certain circumstances).

  • Regulations (Section 121A(d)):

    • The Secretary of the Treasury is directed to issue regulations or guidance to implement the section, including application in cases where not the entire interest is disposed of within the 10-year period.

  • Effective Date:

    • The act applies to sales or exchanges after the date of enactment.

3) Who/What is Affected

  • Taxpayers who currently own farm property: Those who plan to sell qualified farm property to a qualified family member would potentially benefit from the exclusion from gross income on the gains.
  • Qualified family members: Spouses, lineal descendants, and certain in-laws or adopted children who acquire the property via sale or exchange from the farmer.
  • Farm properties: Real estate used as a farm in the required 2-year/8-year window and located in the U.S.

4) Procedural and Timeline Aspects

  • Enactment Path: Introduced in the House on April 30, 2026; referred to the Committee on Ways and Means.
  • Effective Date: Applies to sales or exchanges occurring after enactment.
  • Regulatory Implementation: Requires Treasury Department guidance to operationalize the rules, including basis adjustments and handling partial disposals.

5) Practical Implications and Considerations

  • The exclusion reduces the current federal capital gains tax burden on inter-family farm property transfers, potentially facilitating succession planning and continued operation of family farms.
  • The 10-year holding/step-up mechanism provides a potential long-term tax basis adjustment for heirs, affecting future sale decisions.
  • Elective option (similar to Section 121(f)) could allow taxpayers to choose not to apply the exclusion in certain scenarios, though specifics would depend on implementing regulations.

Overall, the bill seeks to incentivize passing farming operations within families by offering a federal income tax exclusion on gains from qualifying farm property transferred to qualified family members.

Compiled from official sources — confirm details with the bill’s official record.

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