QSBS Tax Calculator 2026 β Section 1202 Exclusion (OBBBA $15M Cap)
Calculate your Section 1202 QSBS capital gains exclusion. Updated for the One Big Beautiful Budget Act with $15M cap. Includes 100%/75%/50% exclusion tiers, AMT preference, and QSBS vs non-QSBS comparison.
$
Amount you paid for the shares at original issuance $
Total proceeds from selling the QSBS shares Years since you acquired the stock at issuance
$
Must be β€ $50M β determines QSBS qualification $
Income before this gain β determines LTCG rate on taxable portion %
Note: some states don't recognize QSBS exclusion $0
Tax Saved by QSBS Exclusion
$0
Excluded Gain
$0
Tax Owed (After Exclusion)
0%
Exclusion Percentage
QSBS Section 1202 Exclusion Breakdown
How to Calculate QSBS Tax Savings
Section 1202 QSBS can eliminate all federal capital gains tax on startup equity. The key is determining your exclusion cap and percentage based on your holding period.
Formula (OBBBA Updated)
Total Gain = Sale Price β Adjusted Basis
Exclusion Cap = max($15,000,000, 10 Γ Adjusted Basis) [OBBBA updated]
Excludable Gain = min(Total Gain, Exclusion Cap)
Excluded Gain = Excludable Gain Γ Exclusion %
β 100% if held 5+ years (stock acquired after Sep 27, 2010)
β 75% if held 4+ years (stock acquired Feb 18, 2009 β Sep 27, 2010)
β 50% if held 3+ years (stock acquired before Feb 18, 2009)
Taxable Gain = Total Gain β Excluded Gain
AMT Preference: only on 50% tier (7% of excluded gain)
Exclusion Cap = max($15,000,000, 10 Γ Adjusted Basis) [OBBBA updated]
Excludable Gain = min(Total Gain, Exclusion Cap)
Excluded Gain = Excludable Gain Γ Exclusion %
β 100% if held 5+ years (stock acquired after Sep 27, 2010)
β 75% if held 4+ years (stock acquired Feb 18, 2009 β Sep 27, 2010)
β 50% if held 3+ years (stock acquired before Feb 18, 2009)
Taxable Gain = Total Gain β Excluded Gain
AMT Preference: only on 50% tier (7% of excluded gain)
Example
Basis $200K, sale price $5M, held 6 years (100% exclusion):
Total gain: $4,800,000
Exclusion cap: max($15M, 10 Γ $200K = $2M) = $15,000,000
Excludable gain: min($4.8M, $15M) = $4,800,000
Excluded gain: $4,800,000 Γ 100% = $4,800,000
Taxable gain: $0
Federal tax: $0 β saving ~$960,000 vs. non-QSBS
Total gain: $4,800,000
Exclusion cap: max($15M, 10 Γ $200K = $2M) = $15,000,000
Excludable gain: min($4.8M, $15M) = $4,800,000
Excluded gain: $4,800,000 Γ 100% = $4,800,000
Taxable gain: $0
Federal tax: $0 β saving ~$960,000 vs. non-QSBS
Extended
Holding Period Optimizer & QSBS vs Non-QSBS
Compare QSBS exclusion tiers and model the tax savings vs. selling non-QSBS shares
Compare all three QSBS exclusion tiers and model what-if scenarios for different holding periods. Also compare QSBS vs. non-QSBS tax treatment.
| Scenario | Hold Required | Exclusion % | Excluded Gain | Taxable Gain | Tax Owed | Tax Saved |
|---|
QSBS vs Non-QSBS Comparison
| Treatment | Total Gain | Taxable Gain | Federal Tax | State Tax | Total Tax | Net Proceeds |
|---|
Frequently Asked Questions
What is Section 1202 QSBS and how does it work?
Section 1202 of the tax code allows investors and founders of qualified small business stock (QSBS) to exclude a significant portion of their capital gain when they sell shares held for more than 5 years. The company must be a C-Corporation, must have had aggregate gross assets of $50M or less at the time of issuance, and the stock must be acquired at original issuance. The One Big Beautiful Budget Act (OBBBA) raised the exclusion cap to the greater of $15M or 10Γ adjusted basis.
What are the QSBS exclusion tiers?
The exclusion percentage depends on when the stock was acquired and how long it was held: 100% exclusion applies if held 5+ years (for stock acquired after September 27, 2010), 75% exclusion for stock acquired between February 18, 2009 and September 27, 2010 held 4+ years, and 50% exclusion for stock acquired before February 18, 2009 held 3+ years. Most modern startup investors and founders use the 100% exclusion tier.
How does the OBBBA affect the QSBS exclusion cap?
The One Big Beautiful Budget Act raised the QSBS exclusion cap from $10M (or 10Γ basis) to the greater of $15M or 10Γ adjusted basis. This means if your adjusted basis is $2M, your cap is $15M (since 10Γ $2M = $20M exceeds $15M). If your basis is $500K, the cap is $15M (since 10Γ $500K = $5M is less than $15M). The higher cap benefits investors with smaller basis amounts and larger gains.
Does AMT apply to QSBS gains?
For the 50% exclusion tier only, the excluded gain is an Alternative Minimum Tax (AMT) preference item β meaning you add back 7% of the excluded gain to AMT income. For the 75% tier, 42% of the exclusion is an AMT preference. For the 100% exclusion tier (most common for post-2010 stock), there is NO AMT preference item β the exclusion is complete for both regular tax and AMT purposes.
What businesses qualify for QSBS treatment?
Qualified Small Businesses must be: (1) a domestic C-Corporation at time of issuance and at time of sale; (2) aggregate gross assets must not have exceeded $50M at time of issuance or immediately after; (3) engaged in a qualified trade or business (most tech, manufacturing, retail qualify; professional services like law, finance, health are excluded); and (4) stock must have been acquired at original issuance in exchange for money, property, or services.