The QSBS exclusion, decoded for OBBBA.
Tiered 50%/75%/100% exclusion at 3/4/5+ year hold for stock issued after 2025-07-04. $15M cap or 10× basis, whichever is greater. $75M gross-asset ceiling. Then the 50-state conformity layer reshapes the answer state by state.
Every figure pinned to Cornell LII, eCFR, congress.gov, or a state DOR. Decoder runs in your browser — nothing is sent to a server.
Run your inputs through the §1202 engine
Add one row per issuance. The decoder picks the right pre/post-OBBBA rule set, applies the tiered exclusion, computes the cap arithmetic, and overlays state conformity. Multi-issuance portfolios aggregate below the per-row cards.
How §1202 became OBBBA-era §1202
The exclusion arrived in 1993, reached 100% in 2010, lost its AMT preference in 2017, and got the tiered upgrade in 2025. The next major beats — cap indexation in 2027, first 3-year-tier exits in 2028 — define the planning cycle for the next decade.
§1202 from enactment to the OBBBA decade
- 1993
§1202 enacted
Revenue Reconciliation Act of 1993. 50% exclusion for QSBS held 5+ years; $10M / 10× basis cap; $50M gross-asset ceiling at issuance.
- 2010
100% exclusion (Small Business Jobs Act)
Exclusion raised to 100% for QSBS acquired between 2010-09-28 and 2010-12-31; later extended and made permanent.
- 2017
TCJA — AMT preference repealed
Tax Cuts and Jobs Act eliminated the §57(a)(7) AMT-preference treatment of the §1202 excluded portion. The exclusion is now 100% clean of AMT add-back.
- 2025-07-04
OBBBA signed (P.L. 119-21 §70431)
Tiered exclusion (50% / 75% / 100% at 3y / 4y / 5+y) for stock issued after this date. Per-issuer cap raised $10M → $15M (indexed 2027+). Gross-asset ceiling raised $50M → $75M.
- 2027
Cap indexation begins
The post-OBBBA $15M per-issuer cap begins annual inflation indexation under the chained-CPI methodology referenced by §1202(b)(1)(A).
- 2028
First 3-year tier
Stock issued on the OBBBA signing day hits the 3-year hold. First wave of taxpayers takes the 50% post-OBBBA tier; first 28%-rate-on-unexcluded events file.
- 2030
First 5+ year tier
Earliest post-OBBBA issuance reaches the full 100% exclusion. Recurring annual demand thereafter as new vintages roll through the hold-period ladder.
The §1202 hold-period ladder
Where the federal exclusion actually sticks
California taxes 100% of QSBS gain at the state level — the federal exclusion buys you nothing in CA. Pennsylvania and New Jersey partially decouple. Nine states have no income tax at all. The remaining 40 + DC conform. Click any tile for the state's controlling statute and a state-specific worked example.
Six pillars covering the §1202 framework
Each pillar pins to Cornell LII, eCFR, congress.gov, or IRS.gov. Supplementary sources (Tax Adviser, Bloomberg Tax, etc.) are referenced explicitly as non-load-bearing context.
OBBBA cutover — pre vs post 2025-07-04
Three independent changes for stock issued after 2025-07-04: tiered exclusion, $15M cap, $75M ceiling. Plus the 50-state conformity layer.
Read pillar →The 3-year, 4-year, and 5+ year tiers
Post-OBBBA stock: 50% at 3y, 75% at 4y, 100% at 5y+. The unexcluded slice is taxed at 28%, not the 20% LTCG schedule.
Read pillar →Which rule set applies — issuance, not sale
The rule set follows the issuance date. Pre-OBBBA stock keeps the binary 5-year / $10M / $50M framework forever.
Read pillar →$10M / $15M / 10× basis cap
Greater of the statutory dollar cap or 10× your basis at issuance. For high-basis founders, the 10× path usually wins.
Read pillar →§1045 rollover — under-5y exit
If you exit before 5 years, the 60-day §1045 rollover into replacement QSBS defers the gain and tacks the holding period.
Read pillar →§1244 loss alternative
If the position is at a loss, §1244 may convert up to $50k single / $100k MFJ from capital loss to ORDINARY loss.
Read pillar →Form 8949 walkthrough,
line by line
Adjustment code Q, Part II long-term reporting, the cross-reference to Schedule D, the §1045 code R path, and the §1244 Form 4797 hand-off — pinned to IRS Form 8949 instructions and the underlying statute.
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