QSBS Exclusion Calculator
§ 1202 as amended in 2025 · reviewed September 6, 2026
Shows how much profit from selling stock in a small company can be excluded from tax, and what the rest costs. AboutLess
In plain words. If you were an early owner of a small company's stock and hold it long enough, the law lets you exclude some or all of the profit when you sell: up to ten million dollars per company, or more if you paid a lot for the stock. Stock issued after a recent law change gets a partial exclusion after three years and a full one after five. This tool takes the profit, what you paid, when the stock was issued, and how long you held it, and shows what is excluded and the tax on what is not.
Why it matters. For a founder or early investor this can be the largest tax number of their life, and the holding period and the cap are where the planning happens before a sale.
An example. Eight million dollars of profit on stock issued in the years before the law change, held six years, with $100,000 paid for it: all eight million is excluded and the federal tax is zero. Twelve million would put two million over the cap, taxed at about $476,000.
Where it stops. It takes for granted that the company qualifies: a domestic C corporation under the asset limit at the time the stock was issued, in an eligible business. Those tests are the attorney's, and the answer is confirmed before the sale, not after. Everything it leaves out.
The sale price minus what the stock cost you, for this one company's stock.
What you paid for it, or the value of what you gave the company in exchange. The cap on the exclusion is ten times this figure or the flat per-company limit, whichever is larger.
For stock issued before the 2025 law change, you must hold it more than five years. Any less and nothing is excluded.
- Federal tax on the sale
- $0
- Nothing is taxed
- Federal tax if nothing were excluded
- $1,904,000
- At the 20% gains rate plus the 3.8% investment surtax
- Tax saved by the exclusion
- $1,904,000
- No alternative minimum tax adjustment for this stock
The exclusion is per person and per company. A founder with stock in two companies has a cap for each, and spouses filing jointly share one cap per company. Shares you were given or inherited keep the original owner's holding period. Shares from exercising an option start their holding period at the exercise. If you sell before the holding period is up, you can roll the money into new qualified small business stock within 60 days and keep the clock running.
This follows the federal rules for qualified small business stock as changed in 2025, including the 28 percent rate on the taxed part and the alternative minimum tax adjustment. It assumes the company qualified. The company must have been a U.S. C corporation with gross assets under $50 million when the stock was issued, running an active business, and you must have received the stock when it was first issued. None of that is tested here. It leaves out state tax, a rollover into new stock, exclusions already claimed on the same company's stock in earlier years, and the rules about the company buying back shares. Educational, not advice.
This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.
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.