Figures are current as of 2026 under the One Big Beautiful Bill Act (OBBBA). Tax law changes; this is informational and not tax or legal advice. Confirm any figure with your advisor before acting.
Qualified Small Business Stock (QSBS) under Section 1202 has long been one of the most powerful breaks available to founders. The OBBBA made it more generous.
What changed
- The per-issuer exclusion cap rose to $15M (from $10M).
- The gross-asset cap rose to $75M, widening the set of companies that can qualify.
- A phased exclusion now applies: 50% at 3 years, 75% at 4 years, and 100% at 5 years of holding.
For a founder approaching a sale, that means a meaningful share of the gain may be excluded from federal tax — if the stock qualifies and the holding period is met.
Where planning earns its keep
- Holding period. Timing a sale around the 3/4/5-year thresholds can change the outcome materially.
- Stacking. Gifts to non-grantor trusts or family members can multiply the per-issuer exclusion across taxpayers, when done carefully and with counsel.
- State residency at sale. QSBS addresses federal tax; your state of residence at the time of sale can drive a separate state bill. Residency is itself a planning lever.
The coordinated view
QSBS planning touches your entity structure, your estate plan, and your investment strategy after the liquidity event. We model the after-tax proceeds under different timelines and structures, and coordinate with your CPA and attorney — so the exit is planned before a buyer sets the terms.