QSBS Advisor Match

QSBS Exclusion Calculator

If your stock qualifies as Qualified Small Business Stock under IRC §1202, you can exclude federal capital-gains tax on the greater of $15 million or 10× your adjusted basis, per company. This calculator estimates how much of your gain is excluded under the post-OBBBA rules, the tax on any portion that isn't, and what you'd owe without QSBS at all.

What you paid for the stock — exercise cost, purchase price, or contributed value.
What you expect to receive in the tender, acquisition, or post-IPO sale.
Post-OBBBA tiered exclusion for stock issued after July 4, 2025. Stock issued earlier needs a full 5 years for any exclusion.
California: up to 13.3% · New York: ~10.9% · Texas / Florida / WA: 0%

How the QSBS exclusion is calculated

Section 1202 excludes gain from federal income tax, subject to a per-issuer cap and a holding-period schedule. The mechanics, step by step:

  1. Gain = sale proceeds − adjusted basis. QSBS only excludes gain, not the return of your basis.
  2. Per-issuer cap = the greater of $15,000,000 or 10× your adjusted basis. The 10×-basis alternative is what makes QSBS enormous for investors who put real money in: a $3M basis supports up to $30M of excluded gain.1
  3. Eligible gain = the lesser of your gain or the cap. Gain above the cap is ordinary long-term capital gain (taxed here at 23.8% = 20% + 3.8% NIIT).
  4. Tiered exclusion (post-OBBBA, stock issued after July 4, 2025): 3 years held excludes 50%, 4 years excludes 75%, 5+ years excludes 100%. The portion of eligible gain that isn't excluded is taxed at the 28% §1202 rate, not the normal LTCG rate.2
  5. State tax: conforming states follow the federal exclusion. Non-conforming states (California, New Jersey, Pennsylvania, and others) tax the full gain regardless — which this calculator applies when you select "No."
The 28% trap at 3 and 4 years. Selling at the 3-year (50%) or 4-year (75%) tier means the unexcluded slice is taxed at 28% — higher than the 23.8% you'd pay on ordinary long-term gain. If your position is at all moveable, reaching the 5-year mark for the full 100% exclusion is almost always worth the wait. A §1045 rollover can preserve the clock if a sale is forced before then.

What this calculator simplifies

This is an estimate, not a tax return. It assumes the stock qualifies (see the eligibility checklist), applies a flat 28% to the non-excluded QSBS portion and 23.8% to gain above the cap, and treats state conformity as all-or-nothing. It does not model AMT preference items on pre-2010 stock, the interaction with the §1045 60-day rollover, or per-trust stacking. Those require a specialist — which is exactly what determines whether the exclusion survives at all.

Related reading

Confirm your exclusion with a specialist — before you sell

The numbers above assume your stock qualifies and your clock has run. Whether it actually does is a fact-specific analysis that has to happen before the deal closes. Get matched with a fee-only advisor who does QSBS eligibility, §1045, and stacking analysis every day. No obligation.

Sources

  1. IRC § 1202 — Partial exclusion for gain from certain small business stock: per-issuer cap of the greater of $15M (post-OBBBA) or 10× adjusted basis.
  2. The Tax Adviser — QSBS gets a makeover: Sec. 1202's new look (Nov 2025): post-OBBBA tiered 50% / 75% / 100% exclusion, $75M gross-asset threshold, 28% rate on unexcluded gain.

Post-OBBBA rules effective for stock issued after July 4, 2025; stock issued earlier follows the prior 5-year / 100% / $10M rules. Estimates only — not tax advice. Confirm eligibility and tax treatment with qualified tax counsel.