New Tax Option for Selling Farmland Under the OBBB Act

Preface: “Agriculture is our wisest pursuit, because it will in the end contribute most to real wealth, good morals, and happiness.” – Thomas Jefferson

New Tax Option for Selling Farmland Under the OBBB Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. Among its many changes, the OBBB Act includes a new tax break for farmers and landowners: if you sell qualified farmland to a qualified farmer, you can now choose to spread your tax payments over four years instead of paying the full amount all at once.

What This Means

If you qualify, you can pay the taxes from the sale in four equal annual installments—making it easier to manage cash flow after selling your farmland. This applies to sales or exchanges that happen in tax years starting after July 4, 2025.

How It Works

1. 1. You make an election on your tax return for the year you sell the land.
   2. The installment option only applies to the part of your tax bill related to the gain from the sale.
   3. The first payment is due on the normal due date of your return for that year (no extensions).
   4. The other three payments are due on the regular tax return due dates for the next three years.

What Counts as “Qualified Farmland”

The land must:

• • Be located in the United States.
  • Have been used by you for farming—or leased by you to a farmer—for almost all of the last 10 years before the sale.
  • Come with a legal agreement that it will stay as farmland for at least 10 years after the sale.
  • Tip: This election must be made when you file your return for the year of the sale—if you miss it, you can’t go back and choose it later. If you’re thinking about selling farmland, talk with your tax advisor well before the sale to see if you qualify and to plan ahead.

Who is a “Qualified Farmer”

• The buyer must be an individual who is actively engaged in farming.

Selling farmland can lead to a large tax bill in one year for farming land owners. This new legislation lets you spread out that tax cost, giving you more flexibility to reinvest, save, or manage your cash flows.