QSBS Exclusion Calculator: the facts

1. Gain on qualified small business stock held more than five years is excluded from income: 100 percent for stock issued after September 27, 2010, 75 percent for stock issued February 18, 2009 through September 27, 2010, and 50 percent before that (§ 1202(a)).
2. For stock issued after July 4, 2025 the holding period is tiered: 50 percent excluded at three years, 75 percent at four, 100 percent at five (§ 1202(a)(5)).
3. The exclusion is capped per issuer at the greater of a dollar amount or ten times the basis in the stock: $10 million for stock issued through July 4, 2025, $15 million after, indexed from 2027 (§ 1202(b)). The company's gross assets may not have exceeded $50 million at issuance, $75 million for the new stock (§ 1202(d)).
4. Gain that is not excluded is taxed at up to 28 percent rather than 20 (§ 1(h)(4)), plus the 3.8 percent surtax. Example: $12,000,000 of gain on stock from the third window with $100,000 of basis: $10,000,000 excluded, $2,000,000 over the cap taxed at 20 percent plus the surtax, $476,000 in all against $2,856,000 with no exclusion.
5. Example, new stock: $2,000,000 of gain on stock issued after July 4, 2025 and sold after four years is 75% excluded; the included $500,000 is taxed at 28 percent plus the surtax, $159,000 in all.
6. The stock must be original issue from a domestic C corporation in an active qualified trade or business (not, among others, health, law, finance, consulting, or hospitality), and the exclusion is per taxpayer per issuer; gifts and bequests carry the holding period with them.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.