The One Big Beautiful Bill Act
("OBBBA") was recently signed into law
on July 4, 2025. One of the changes to the tax code in the OBBBA
impacts qualified small business stock
("QSBS") under Section 12021.
The changes generally apply to stock issued after July 4, 2025, and
make it easier for taxpayers to benefit from tax breaks when they
invest in companies.
Previous articles have addressed the generous tax
benefits associated with QSBS, along with the eligibility
requirements that must be satisfied before stockholders are
eligible to claim Section 1202's gain exclusion.
Tiered Exclusion Benefits
QSBS has special tax benefits that allow taxpayers to exclude
income on the gains they realize when they sell the stock as long
as they hold it for a certain period. Before the OBBBA, to take
advantage of the tax benefits, taxpayers had to hold QSBS for at
least 5 years to obtain any tax benefits. Now, the OBBBA
shortens the time needed to obtain some benefits and
