July 5, 2025
On July 4, 2025, President Donald Trump signed into law the "One Big Beautiful Bill Act" (OBBBA), a sweeping piece of legislation that includes significant updates to Section 1202 of the Internal Revenue Code, which governs the tax treatment of investments in Qualified Small Business Stock (QSBS).
Among the most notable updates to the QSBS rules are:
Increased Gain Exclusion: The lifetime cap on the amount of capital gains that can be excluded from federal taxes on the sale of QSBS has been raised.
Higher Corporate Asset Limit: The gross assets threshold for a company to qualify as a small business for the purposes of this tax benefit has been increased, expanding the pool of eligible companies.
Tiered Holding Periods: The legislation introduces a new tiered system for the holding period required to claim the tax exclusion, offering partial benefits for investments held for shorter periods than the previous five-year requirement.
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