About the QSBS Exclusion Calculator
This QSBS calculator estimates how much gain from selling qualified small business stock (QSBS) you can exclude from federal income tax under Internal Revenue Code Section 1202, and how much tax that saves. It applies the exclusion percentage for when you acquired the stock, the holding-period rules and the per-issuer limit — the greater of the dollar cap (less exclusions already taken for that company) or 10 times your adjusted basis in the shares sold.
It reflects the July 4, 2025 amendments: stock acquired after July 4, 2025 qualifies for a 50% exclusion after 3 years, 75% after 4 years and 100% after 5 years, with a $15 million per-issuer cap (indexed for inflation for tax years beginning after 2026, so $15 million applies for 2026). Stock acquired earlier needs more than 5 years of holding and keeps the $10 million cap, with 50%, 75% or 100% depending on the acquisition date.
The tool assumes the stock already meets every other Section 1202 requirement — original issuance from a domestic C corporation, the gross-assets test and the active-business test. Non-excluded Section 1202 gain is taxed at up to 28%, other long-term gain at your capital gains rate, and the 3.8% net investment income tax can apply to taxable gain. State tax and AMT are not modelled.
With the default inputs, the gain excluded from tax is $12,000,000.00. Change any value above to recalculate instantly.
How to use the qsbs exclusion calculator
- 1Choose when you acquired the stock — this sets the exclusion rules and cap.
- 2Enter how long you held it, in years with decimals.
- 3Enter your adjusted basis and the sale proceeds.
- 4Add any QSBS gain you already excluded for the same company in earlier years.
- 5Set your tax rates and NIIT status, then read the excluded gain and tax saved.
Formula and method
Section 1202(a) sets the exclusion percentage: for stock acquired after July 4, 2025 it is 50% after at least 3 years, 75% after 4 years and 100% after 5 years; earlier stock must be held more than 5 years and gets 100% (acquired after September 27, 2010), 75% (after February 17, 2009) or 50% (earlier). Section 1202(b) limits the eligible gain per issuer to the greater of $15 million ($10 million for stock acquired on or before July 4, 2025), reduced by gain taken into account in earlier years, or 10 times the adjusted basis of the stock sold this year.
Gain that would have been excluded but for the percentage limit is “section 1202 gain” under Section 1(h)(7) and is part of 28-percent rate gain, so it is taxed at the lower of 28% or your ordinary rate. Gain above the per-issuer limit is regular long-term capital gain. Excluded gain is not in gross income, so the 3.8% net investment income tax applies only to the taxable portion. AMT and state taxes are ignored.
- Dollar cap
- $15M for stock acquired after July 4, 2025; $10M otherwise
- Basis
- Adjusted basis of the QSBS sold in the year
- Exclusion %
- 50%, 75% or 100% depending on acquisition date and holding period
Worked examples
Founder stock acquired after July 4, 2025, held 5 years
A $12M gain is under the $15M per-issuer cap and the stock has been held 5 years, so 100% is excluded. Without QSBS the gain would cost 23.8% (20% + 3.8% NIIT), or $2,856,000.
New-rules stock sold after 3 years (50% tier)
Half of the $8M gain ($4M) is excluded. The other $4M is section 1202 gain taxed at 28% plus 3.8% NIIT, or $1,272,000, versus $1,904,000 at 23.8% without QSBS — a $632,000 saving.
2015 stock, gain above the $10M cap
Stock acquired between 2010 and July 4, 2025 gets 100% exclusion but a $10M cap (10 × $200,000 basis is only $2M). $10M of the $25M gain is excluded; the remaining $15M is taxed at 23.8%, or $3,570,000.
High basis unlocks the 10× rule
With a $3M basis, 10 × basis ($30M) beats the $10M dollar cap, so $30M of the $37M gain is excluded. Only $7M is taxed, saving about $7.14M.
Frequently asked questions
What changed for QSBS in 2025?+
For stock acquired after July 4, 2025, Section 1202 now allows a 50% exclusion after 3 years, 75% after 4 years and 100% after 5 years, raises the per-issuer cap from $10 million to $15 million (inflation-indexed after 2026), and raises the corporate gross-assets limit from $50 million to $75 million.
What qualifies as QSBS?+
Stock acquired at original issuance from a domestic C corporation for money, property or services, where the company’s aggregate gross assets did not exceed the limit ($75 million after July 4, 2025; $50 million before) and at least 80% of assets are used in an active qualified business. Many service businesses, banks, farming and hospitality are excluded.
How does the per-issuer cap work?+
For each company, eligible gain is limited to the greater of the dollar cap minus gain already taken into account in prior years, or 10 times the adjusted basis of the QSBS you sell in the current year. The 10× rule helps investors who paid a lot for their shares.
Is QSBS gain exempt from state tax?+
Not everywhere. Most states follow the federal exclusion, but some — notably California — do not, and tax the full gain. Check your state rules separately; this calculator estimates federal tax only.
Can I roll over QSBS gain if I sell too early?+
Section 1045 lets you defer gain on QSBS held more than six months by reinvesting the proceeds in other QSBS within 60 days. The replacement stock inherits the holding period, which can help you reach the exclusion thresholds.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.