A quiet tool

Some of the gain never counts. Here is how much.

Stock of a qualified small business, held long enough, has part or all of its gain excluded from income, with a cap per company. Enter the gain, the basis, when the stock was issued, and how long it was held, and see the split.

§ 1202 as amended in 2025 · Last reviewed September 6, 2026 · Facts · The table · Methodology

https://consideratecapital.com/tools/qsbs-exclusion-calculator

Gain on the sale

The sale price minus what the stock cost you, for this one company's stock.

What the stock cost you (your basis)

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.

When the stock was issued to you

On or before February 17, 2009February 18, 2009 to September 27, 2010September 28, 2010 to July 4, 2025After July 4, 2025

Whole years held at the sale

For stock issued before the 2025 law change, you must hold it more than five years. Any less and nothing is excluded.

Gain excluded from tax

$8,000,000

100% of the $8,000,000 that falls under the cap is excluded, meaning it is never taxed. The cap for this company's stock is $10,000,000, which is the flat $10 million limit per company.

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.

Built by Joshua Mangoubi, CFA, MBA. By using this tool you agree to the tool terms, which include that results vary with each use and over time. Cite this tool, or take a table or chart

How it counts. The exclusion percentage by issue window and holding period, the per-issuer cap as the greater of the dollar amount and ten times basis, and the tax on what is left at 28 percent plus the surtax, all from the statute as amended.

What it assumes. That the company and the stock qualify: a domestic C corporation under the gross-assets limit at issuance, an active qualified business, original issue, no disqualifying redemptions. Those are the attorney's questions before a sale, and the reason the exclusion is confirmed with counsel rather than assumed.

Where we fit in. We integrate tax considerations into your investment strategy and collaborate with estate attorneys and CPAs to ensure your plan is coordinated. We are not a law firm or accounting firm, so we do not provide legal or tax advice. Everything in this material is for educational purposes, based on primary sources. Before taking any action, please consult the appropriate professionals to apply these ideas to your situation.

The facts, in one place.

Six quotable sentences on § 1202 after the 2025 amendments.

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)).
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)).
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)).
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.
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.
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.

The windows.

Every window, with the holding period it requires and its cap.

§ 1202 exclusion percentages, per-issuer caps, and gross-assets limits, as amended in 2025 (2026 figures; the new amounts index from 2027)
Stock issued	Holding period	Excluded	Per-issuer cap	Gross assets limit
On or before February 17, 2009	More than 5 years	50%	$10 million or 10× basis	$50 million
February 18, 2009 to September 27, 2010	More than 5 years	75%	$10 million or 10× basis	$50 million
September 28, 2010 to July 4, 2025	More than 5 years	100%	$10 million or 10× basis	$50 million
After July 4, 2025	3 years	50%	$15 million or 10× basis	$75 million
After July 4, 2025	4 years	75%	$15 million or 10× basis	$75 million
After July 4, 2025	5 years	100%	$15 million or 10× basis	$75 million

How the exclusion works.

Section 1202 lets a non-corporate shareholder exclude gain on stock of a qualified small business acquired at original issue and held long enough. Three things set the amount. When the stock was issued picks the rules: for stock issued through the 2025 Act's date, more than five years of holding and an exclusion of 50, 75, or 100 percent by issue date; for stock issued after it, a tiered exclusion that starts at three years. The per-issuer cap is the greater of a dollar amount or ten times the basis in the stock, so a founder with little basis is bound by the dollar figure and an investor who paid in a lot may not be. And what is not excluded is taxed at up to 28 percent, not 20, plus the surtax.

The company's side of the test is not arithmetic: a domestic C corporation, gross assets under the limit at and before issuance, an active qualified business through the holding period, and no disqualifying redemptions. The calculator takes those as given and says so. The exclusion is per taxpayer per issuer, which is why gifts of stock to family members before a sale are a planning subject, and why the holding period carries through a gift or a bequest.

Methodology.

Inputs. The gain, the basis in the stock, the issue window, and whole years held at the sale. Prior exclusions from the same issuer are taken as none.
The percentage. By window for legacy stock, applied only when held more than five years (§ 1202(a)(1), (3), (4)); by holding period for new stock, 50, 75, or 100 percent at three, four, or five years (§ 1202(a)(5)).
The cap. The greater of the dollar amount for the window (§ 1202(b)(1)(A), (b)(4)) and ten times basis (§ 1202(b)(1)(B)). Gain within it is eligible; gain over it is an ordinary long-term gain at 20 percent.
The tax. The included part of eligible gain at 28 percent (§ 1(h)(4)); the over-cap part at 20 percent; the 3.8 percent surtax on everything included (§ 1411). The saving is against 20 percent plus the surtax on the whole gain.
The AMT preference. Seven percent of the excluded gain for stock issued before September 28, 2010 (§ 57(a)(7)); reported, not computed into a bill.
Validation. A fully excluded legacy gain, a gain over the legacy cap, new stock at four years, new stock too young, a ten-times-basis cap that exceeds the dollar cap, the 75 percent window with its preference, and the more-than-five-years edge. A transcription error fails the build.
Not modeled. The gross-assets and active-business tests, the original-issue requirement, redemptions, § 1045 rollovers, prior-year exclusions from the same issuer, the indexing of the new amounts, state conformity, and the interaction with the alternative minimum tax beyond the preference. Educational, not advice.

Sources.

1. United States Code (Cornell LII), 26 U.S.C. § 1202 — Partial exclusion for gain from certain small business stock. The 50, 75, and 100 percent exclusions by issue date for stock held more than five years (a)(1), (3), (4); the tiered 50/75/100 percent exclusion at three, four, and five years for stock issued after July 4, 2025 (a)(5); the per-issuer limit of $10,000,000 or ten times basis, and $15,000,000 for the new stock, indexed from 2027 (b); and the $50,000,000 and $75,000,000 aggregate gross assets tests (d). Retrieved September 6, 2026; verified September 6, 2026.
2. Congress.gov, Public Law 119-21, § 70431 — Enhancement of qualified small business stock exclusion (2025). The 2025 amendments: the tiered holding period, the $15,000,000 cap, the $75,000,000 gross assets limit, and their inflation adjustments, for stock issued after the date of enactment. Retrieved September 6, 2026; verified September 6, 2026.
3. United States Code (Cornell LII), 26 U.S.C. § 1(h)(4) and (h)(7) — 28-percent rate gain; section 1202 gain. That the part of a § 1202 gain not excluded is taxed at a maximum rate of 28 percent rather than the 15 or 20 percent long-term rate. Retrieved September 6, 2026; verified September 6, 2026.
4. United States Code (Cornell LII), 26 U.S.C. § 57(a)(7) — Items of tax preference: exclusion for gains on sale of certain small business stock. That 7 percent of the excluded gain is an alternative minimum tax preference, and that stock issued after September 27, 2010 is exempt from it. Retrieved September 6, 2026; verified September 6, 2026.
5. United States Code (Cornell LII), 26 U.S.C. § 1411 — Imposition of tax (net investment income). The 3.8% surtax; for a trust, the threshold is the dollar amount at which the highest § 1(e) bracket begins; for individuals, $200,000 and $250,000, unindexed. Retrieved September 4, 2026; verified September 4, 2026.

Revision history.

The record's history.

September 6, 2026: First release: the exclusion by issue window and holding period under the 2025 amendments, the per-issuer cap, the included gain at 28 percent plus the surtax, and the gross-assets test as a stated condition.

Canonical address: https://consideratecapital.com/tools/qsbs-exclusion-calculator

A first conversation

When you are ready, this is worth an unhurried conversation.

A first call with an advisor, just to get to know each other. No preparation needed, and no obligation on either side.

Schedule a conversation See if you're a fit