One of the most valuable exclusions in the tax code for startup founders and early investors — potentially excluding the entire gain from federal tax.
How it works
The exclusion cap is the greater of $15,000,000 or 10 times the original cost basis. For stock issued on or after July 4, 2025, the exclusion percentage tiers in by holding period — 50% at 3 years, 75% at 4 years, and the full 100% at 5 years or more.
What this does not include
QSBS eligibility has strict requirements — the issuing company must be a C corporation with under $75 million in gross assets at issuance, among other conditions — this calculator computes the exclusion amount assuming eligibility, not eligibility itself.
How to use this calculator
- Enter the original cost basis and realized gain.
- Enter years held.
Frequently asked questions
Does QSBS apply to stock issued before July 4, 2025?
Older QSBS rules apply an all-or-nothing 100% exclusion at the 5-year mark with a $10 million cap (not indexed for inflation) rather than the newer tiered structure — a different rule set this calculator’s newer-rules version doesn’t compute.
Why is the cap the “greater of” two figures?
To ensure very early, low-basis investors still get a meaningful dollar exclusion even if 10x their tiny basis would be small — the flat $15 million floor protects that case.
Is there a state-level QSBS benefit too?
Some states conform to the federal QSBS exclusion and some don’t — a state-specific detail this calculator’s federal-only computation doesn’t address.
