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    §1202 QSBS · post-OBBB (P.L. 119-21) · tiered exclusion

    QSBS §1202 Calculator

    OBBB rewrote §1202 for stock acquired after July 4, 2025: a tiered 50 / 75 / 100% exclusion at 3, 4, and 5 years, a per-issuer cap of the greater of $15M or 10× basis, and — critically — no AMT preference on the partial or full exclusions. Included §1202 gain is taxed at up to 28%, plus the 3.8% NIIT when your MAGI is over the threshold. Stock acquired on or before July 4, 2025 keeps the old rule: an exclusion only when held more than 5 years.

    Updated Reviewed for OBBB (P.L. 119-21) §1202 rewrite
    IRC §1202 · OBBB tiered · §57(a)(7) AMT removed

    Drives the regime (before/after 2025-07-04). Clock starts at actual STOCK acquisition — option exercise, not grant; SAFE conversion, not signing.

    For the 10× cap, basis is measured without any addition after the stock was originally issued (§1202(b)(1)). If you received the stock in exchange for property, its basis for this test is at least the property's fair market value at the exchange (§1202(i)).

    The eligible §1202 gain from this issuer's stock taken into account on your earlier returns — the whole eligible gain, before the 50% or 75% exclusion percentage, not just the part you excluded. It reduces the dollar cap (§1202(b)(1)(A)), not the 10×-basis cap. Gain from an earlier joint return counts half to each spouse (§1202(b)(3)(B)).

    Your adjusted gross income without this gain. The 3.8% NIIT applies only to the part of the taxable gain that lifts MAGI over $200,000 (single or head of household), $250,000 (joint) or $125,000 (separate).

    Post-OBBB regime
    Held 5.08 years
    100% exclusion
    Per-issuer cap$15,000,000 (dollar cap wins)

    The $15,000,000 cap is in 2026 dollars. §1202(b)(5) indexes it for years after 2026, so the cap for a 2030 sale will be higher and the above-cap tax shown is an upper bound.

    Excluded gain$10,000,000
    Included §1202 gain × 28% (top rate)$0 → $0
    Above-cap gain × 20% (top rate), at most$0 → $0
    NIIT (3.8% of the gain over the MAGI threshold)$0
    Federal tax at top rates (upper bound)$0

    Included §1202 gain is taxed at up to 28% and above-cap gain at up to 20%; lower brackets can make it less.

    Effective rate on total gain0.00%

    Honesty box

    Assumes the stock qualifies: C-corporation, original issuance, gross-assets test at issuance ($75M post-OBBB / $50M pre-OBBB), active qualified trade or business (excludes finance, law, health, consulting, hospitality, farming, etc.), and the correct holding period. Several states do not conform — California taxes the excluded gain. Read the QSBS guide for the qualification tests.

    Related

    • Post-OBBB regime: tiered exclusion (at least 3y/50%, 4y/75%, 5y/100%); per-issuer cap greater of $15M or 10× basis; $75M asset ceiling.
    • No AMT preference on post-OBBB partial or full exclusions (OBBB amended §57(a)(7)).

    Sources & References

    Primary references used for this content

    Perkins Coie

    OBBB — Significant Changes to §1202 QSBS

    Practitioner analysis of the enacted OBBB QSBS rewrite.

    View on perkinscoie.com

    The Tax Adviser (Nov 2025)

    QSBS gets a makeover — §1202's new look

    Post-OBBB tiers, cap, AMT change, and planning notes.

    View on thetaxadviser.com

    IRC §1202

    26 U.S.C. §1202 — Partial exclusion for gain from certain small business stock

    Statutory text.

    View on law.cornell.edu

    ✓3 primary sources; links re-checked on a weekly rotation by the source watcher

    Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.