QSBS Calculator

Estimate how much federal capital gain Section 1202 could exclude on a sale of startup stock, using the holding period, the per-company cap and the 2025 rule changes.

Results

Not tax advice. State rules differ, and eligibility requirements (C corporation, original issuance, gross assets, active business) are not checked. Confirm with a tax advisor before you rely on this estimate.

Estimated excluded gain

100% exclusion

$10,000,000

100% of $10,000,000 eligible gain, out of $11,900,000 total (capped).

Held: 6 years; 2,312 days. Acquired on or before July 4, 2025
Exclusion rate: 100%; Highest rate for this stock
Per-company cap: $10,000,000; Greater of $10M or 10x basis ($1M)
Total gain: $11,900,000; $12,000,000 proceeds less $100,000 basis
Gain still taxable: $1,900,000; Gain above the cap, taxed as ordinary capital gain
Rule for this stock: 100%; After more than 5 years, by acquisition date

Holding period milestones
Threshold	Met on	Exclusion	Status
More than 5 years	Jun 2, 2025	100%	Met

Not tax advice. Federal estimate only; state rules differ, and eligibility requirements are not checked.

Track QSBS in Raziel

Keep acquisition dates, cost basis and holding periods for every startup position in one place.

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The math

How the QSBS exclusion works

Section 1202 lets holders of qualified small business stock exclude some or all of their federal capital gain. How much depends on when you acquired the stock, how long you held it, and a cap per company.

Check the date you acquired it. Stock acquired after July 4, 2025 uses the 2025 rules. Stock acquired on or before that date uses the earlier rules, where the exclusion rate depends on the acquisition date: 50% before February 18, 2009, 75% through September 27, 2010, and 100% after.
Check the holding period. Earlier stock must be held more than five years. Stock acquired after July 4, 2025 gets 50% after three years, 75% after four and 100% after five.
Apply the cap. Eligible gain is limited to the greater of $10M ($15M for stock acquired after July 4, 2025), less gain from the same company in earlier years, or 10 times the basis of the shares sold.
Exclude the rate times the eligible gain. Everything else is taxable.

Gain           = sale proceeds - cost basis
Cap            = greater of $10M or $15M (less earlier gain)
                 and 10 x cost basis of shares sold
Eligible gain  = lower of gain and cap
Excluded gain  = exclusion rate x eligible gain
Taxable gain   = gain - excluded gain

Assumptions and simplifications

Federal only, and an estimate. It does not check eligibility, compute tax owed, or model state tax, AMT, the net investment income tax, Section 1045 rollovers, gifts or stock acquired by exercising options or converting other securities.
A holding period counts as met the day after the anniversary of the acquisition date. Confirm exact dates with a tax advisor.
The $15M cap is indexed for inflation for tax years beginning after 2026; this calculator uses $15M. Married taxpayers filing separately have lower caps, which are not modeled.
Non-excluded Section 1202 gain from a partial (50% or 75%) exclusion is taxed at a rate of up to 28%.
Sources for the 2025 changes: Perkins Coie, Baker Tilly and RSM; statute text at 26 U.S.C. 1202.

Worked example

Bought in June 2020 for $100K, sold for $12M

Holding period: 6 years, more than 5 years
Rules: Acquired before July 5, 2025: 100%
Gain: $12,000,000 - $100,000 = $11,900,000
Cap: Greater of $10M or 10 x $100K = $10,000,000
Eligible gain: $10,000,000
Still taxable: $1,900,000

Estimated excluded gain$10,000,000

Frequently Asked Questions

Common questions about the QSBS calculator and the math behind it.

What is QSBS?

Qualified small business stock under Section 1202 of the Internal Revenue Code. If you hold stock that qualifies and meet the holding period, part or all of your federal capital gain on the sale can be excluded from income, up to a per-company cap.

What changed for stock acquired after July 4, 2025?

The 2025 tax law (often called the One Big Beautiful Bill Act) added a tiered exclusion for stock acquired after July 4, 2025: 50% after three years, 75% after four and 100% after five. It raised the per-issuer dollar cap from $10M to $15M (indexed for inflation after 2026) and the company gross assets limit from $50M to $75M. Stock acquired on or before July 4, 2025 keeps the old rules: a holding period of more than five years and a $10M cap.

How does the cap work?

For each company, the gain you can exclude is limited to the greater of the dollar cap ($10M or $15M, reduced by gain from that company you already took into account in earlier years) or 10 times your adjusted basis in the shares sold that year. Gain above the cap is taxed as ordinary capital gain.

Does my stock qualify?

This calculator does not check. Among other requirements, the stock generally has to be acquired at original issuance from a domestic C corporation, the company’s gross assets must have been under the limit when the stock was issued, it must use most of its assets in a qualified active business (many service, finance and hospitality businesses are excluded), and you cannot be a corporation. A tax advisor can confirm eligibility.

Do states follow the federal QSBS exclusion?

Not all of them. Some states, including California, do not follow Section 1202 and tax the full gain. Others conform fully or partly. This calculator estimates the federal exclusion only.

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