Turbocharged QSBS Benefits Signed into Law: Tech Entrepreneurs Stand to Gain Significantly

By Victor Boyajian, Chris Errico, John Cleary, Rich Williams and Linda Pfatteicher

Prior to the enactment of the One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025, Section 1202 of the Internal Revenue Code provides for the exclusion by certain non-corporate taxpayers of a portion1 of the gain realized from the sale or exchange of qualified small business stock (“QSBS”) held for more than five years, up to a cap (the “Gain Limitation”). The provision was originally enacted to encourage investment in small businesses by offering significant tax incentives to investors, subject to certain requirements regarding the type of business (i.e., a corporation with an active trade or business), the size of the company (generally less than $50M in assets), and the holding period of the stock (generally a minimum of five years).

The OBBBA legislation includes certain amendments to the Internal Revenue Code that significantly expand the tax benefits available for gains from QSBS. These changes, effective for QSBS acquired after the date of enactment, are designed to further incentivize investment in small businesses by phasing in the five year “cliff” holding period requirement, raising the per-issuer Gain Limitation, and adjusting key thresholds for inflation.

The complete insight, including a summary of the principal provisions can be found here.