What is a QSBS exemption and would my C-Corp qualify?
The Qualified Small Business Stock exemption allows a C-Corp's stockholders to write off 100% of personal taxes on gains from the sale of the stock over its original purchase price after five years of ownership. For shares issued before July 4, 2025, stockholders must hold shares for at least 5 years to qualify for the 100% capital gains tax exclusion. For shares issued on or after July 4, 2025, the capital gains tax exclusion is phased in: 50% after 3 years, 75% after 4 years, and 100% after 5 years of ownership.
For shares issued before July 4, 2025, the maximum write-off is $10,000,000 or 10 times the aggregate adjusted basis of the QSBS stock (whichever is higher). For shares issued after July 4, 2025, the maximum write-off is $15,000,000 or 10 times the aggregate adjusted basis of the QSBS stock (whichever is higher).
The potential tax break on a successful exit with QSBS is massive, and virtually all newly-incorporated, high-growth US C-Corp startups would meet the requirements: for shares issued before July 4, 2025, the QSBS exemption can apply to stock issued by an active, domestic C-Corporation with less than $50,000,000 in assets. For shares issued after July 4, 2025, an active, domestic C-Corporation with less than $75,000,000 in assets qualifies for the QSBS exemption.
Read S-Corps, LLCs, and Tax Savings for Startups. If you have any questions about the QSBS or if your company qualifies, consult your tax advisor.
Last updated on March 31, 2026