The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduced a new federal tax provision allowing qualifying farmland sellers to pay income taxes on gains from eligible property sales in four equal annual installments. Under Internal Revenue Code Section 1062, the election provides greater flexibility in managing tax obligations without reducing the total amount owed. For calendar-year taxpayers, the provision first applies to qualifying farmland sales occurring in 2026.

To qualify, farmland generally must have been used for agricultural purposes or leased to a qualified farmer for substantially all of the preceding 10 years, sold to a qualified farmer, and subject to a legally enforceable restriction maintaining agricultural use for 10 years following the sale. Eligible taxpayers must make a timely election, and certain events may accelerate the remaining payments. The provision offers potential cash-flow benefits for landowners while supporting the continued agricultural use of farmland.

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