IRS Agents Don’t Belong on the Family Farm

America's family farms are built on generations of sacrifice. The land, the equipment, and the livestock aren’t luxuries. They're the tools of the trade, passed down from parent to child as both livelihood and legacy. But a proposal that has surfaced repeatedly in Washington continues to loom over family farms across this country, threatening to force families to choose between their land and their tax bill. Not because they sold anything or cashed out, but simply because their property went up in value.

That's the threat posed by a tax on unrealized gains. Consider the Miller family – a hypothetical, but likely familiar, American story. They've farmed the same 400 acres in rural Iowa for three generations. When Miller's grandfather purchased the land decades ago, it was worth a fraction of what it is today (just since the year 2000, average value per acre of land has shot up from $1,857 to $11,549 in 2025). Thanks to rising land values across the Midwest driven by demand, development pressure, and inflation, that same acreage is now worth several million dollars on paper. The Millers haven't sold a single acre. They haven't taken a massive profit. They wake up at dawn, manage their crops, service their equipment, and hope the weather holds. Their wealth exists almost entirely in the ground beneath their feet.

Under a tax on unrealized gains, the IRS would treat that increase in land value as taxable income, even though the Millers never saw a dime of it. Every year, an IRS agent would need to assess what the farm is worth. Every year, the family would owe taxes on gains they haven't realized and money they don't have. How do they pay it? Likely, they’d have to sell off part of the farm. And once you start selling, the legacy your grandfather built doesn't last long.

This isn't a hypothetical confined to Iowa. The American Farm Bureau has noted that the vast majority of farm assets, roughly 82 percent, are tied up in illiquid real estate. Farmers don't have liquid reserves sitting in brokerage accounts to cover arbitrary annual tax bills. They have land. And land, unlike a stock, can't be partially liquidated with a click.