The Farmland Income Gap: What Rented Ground Actually Earns

Quite a bit of farmland is worth far more than it earns. USDA data makes the gap concrete: rented ground returns only about 2 to 3 percent of its market value in cash rent each year, even as the value of the land itself keeps climbing. For the millions of acres now sitting with aging, non-farming owners, that gap is the quiet center of a lot of hard decisions.

Here is what the public data actually shows.

Farmland earns about 2 to 3 percent of its value

In 2025, the average US cash rent was 161 dollars per acre for all cropland and 15.50 dollars per acre for pasture, according to the USDA National Agricultural Statistics Service. Over the same period, average cropland was worth 5,830 dollars per acre and pasture 1,920 dollars per acre.

Put those together and the return is thin. Iowa State University, using USDA data, found that in 2024 Iowa cropland cash rent equaled about 2.7 percent of land value, and pasture just 1.8 percent. Iowa State notes that landowner cash rent return has trended down for decades and has sat near or below 3 percent since 2010.

Measure (USDA, 2025)	Cropland	Pasture
Average cash rent per acre	$161	$15.50
Average value per acre	$5,830	$1,920
Rent as a share of value (Iowa, 2024)	2.7%	1.8%

The value keeps climbing, which makes the gain bigger

The land itself has appreciated steadily. Average US farm real estate reached 4,350 dollars per acre in 2025, up 4.3 percent in a single year. Over the five years through 2024, farmland value rose about 5.8 percent per year nominally, or 2.0 percent after inflation, per USDA Economic Research Service. Cropland values are up 96 percent since 2011.

That is good news for net worth and a growing problem at sale time. The longer ground is held, the larger the embedded capital gain, and the bigger the tax bill when it finally changes hands.

The scale: 1.7 trillion dollars, mostly held by older owners

The freshest picture comes from the USDA 2024 TOTAL survey, released in March 2026. It found:

• Non-operating landlords, people who own farmland but do not farm it, own about 276 million acres of rented ground, valued at roughly 1.7 trillion dollars. That value is up 47 percent from 2014.
• They make up 87 percent of all farmland landlords and collected 34.1 billion dollars in rent in 2024. That rent against that asset base works out to roughly 2 percent, in line with the cap rate above.
• More than a third of these landlords are 75 or older, and they hold more than 40 percent of the acres, rent, and value. Owners 65 and up control about three quarters of the acres rented out by non-operating landlords.

A transfer wave is already being planned

The same survey asked owners how they plan to pass the land on. Looking past the next five years, non-operating landlords plan to transition farmland mainly through wills (42 percent) and trusts (26 percent), with smaller shares selling to a non-relative (7 percent) or a relative (2 percent). Notably, 20 percent have no transition plan at all.

That is a large base of aging owners, holding heavily appreciated ground that earns little relative to its worth, most of whom will move the land within a generation.

The tax friction at sale

When appreciated farmland is sold outright, the gain is taxed. The federal long-term capital gains rate is 0, 15, or 20 percent depending on income, plus a 3.8 percent net investment income tax at higher incomes, for a top combined federal rate of 23.8 percent, before any state capital gains tax. On ground bought decades ago for a fraction of today’s value, that can be a substantial check.

What the gap means for owners weighing a sale

None of this tells any single owner what to do. But it frames the decision a lot of farm and ranch families are sitting with: hold ground that earns a few percent and carries a large unrealized gain, sell it outright and write a big tax check, or look for a path that defers the tax and changes what the proceeds can do.

One of those paths is a 1031 exchange into a Delaware Statutory Trust, where sale proceeds are reinvested into professionally managed real estate, the capital gains tax is deferred under 1031 rules, and the owner steps out of active management with the potential for passive income. It is a regulated securities option, available to accredited investors, with its own risks and tradeoffs. Whether it fits depends entirely on the owner’s situation.

If you are weighing what to do with appreciated ground, we are happy to give you a straight read. Let’s have a visit.

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Sources: USDA NASS 2025 Land Values and Cash Rents Highlights; USDA NASS 2024 TOTAL Survey (ACH22-28, March 2026); USDA Economic Research Service, Farmland Value; Iowa State University Ag Decision Maker; IRS Topic No. 409.