Background: The distribution of farmers’ increment income is the key to the transfer of land use rights. This research aims to detect the optimal payment mode for the distribution of land increment income obtained by farmers in land rights transfer. Methods: The research relied on case analysis, mathematical analysis, and numerical simulation. Results: According to China’s existing payment modes for the increment income of rural collectively owned operating construction land (RCOCL), we summarized these payment modes into three: namely, lump-sum currency payment, a mixed payment of pension and lump-sum currency, and a mixed payment of dividend and lump-sum currency. If the land transfer price of RCOCL is lower than a specific value, the lump-sum currency payment will be optimal for farmers. Suppose the land transfer price is higher than this value. If the enterprise’s profit margin is higher than the pension rate of return, the mixed payment of dividend and lump-sum currency will be optimal; if not, the mixed payment of pension and lump-sum currency will be optimal. Conclusions: Differences in regions, enterprise attributes, and farmers’ characteristics will make the optimal proportion of pension or stock capital in land increment income (OPPSC) different. Generally, OPPSC is often between 40% and 60%.

Promoting the transfer of rural land is an important way for many developing countries to improve the efficiency of rural land use and develop the rural economy. A reasonable income distribution scheme (IDS) is the key to enhancing farmer willingness to participate in the transfer of rural construction land use rights. However, little attention has been paid to farmers’ preference for the IDS of the transfer of rural collective construction land use rights. This research aims to detect the farmers’ preference for IDS in the process of rural collective land rights transfer. Based on the survey data of 489 farmers in Liuyang City, Hunan Province and Deqing County, Zhejiang Province, China, a random parameter Logit model is used to explore their preference for the IDS of the transfer of rural collective construction land use rights. The results show that, in general, the farmers focus on the income distribution ratio and pension in the IDS, which will significantly improve their utility. There are obvious regional differences in their preference for IDSs. For example, farmers in Liuyang prefer payment in shares, while those in Deqing prefer cash. Thus, the IDS for the transfer of rural collective construction land use rights should be based on the basic principle of ensuring fair land value-added income for the farmers, increased payment forms with social security functions, and reasonable IDSs in accord with the preferences of farmers in different regions, so as to enhance farmer willingness to participate.