QSBS Gets A Makeover: Key Changes Under The OBBBA

The One Big Beautiful Bill Act (OBBBA) made the following changes to qualified small business stock (QSBS):

1. The holding period is now graduated for stock acquired after July 4, 2025.
2. The exclusion amount is increased from $10 million to $15 million with a yearly inflation-based adjustment.
3. The limit on “aggregate gross assets” has been increased from $50 million to $75 million.

Prior to the enactment of the OBBBA, QSBS had a holding period of at least five years before the taxpayer could exclude gain on the disposition of such QSBS. The OBBBA changes this regime from an “all or nothing” holding requirement to a graduated scale:

1. QSBS held for at least 3 years will be eligible for 50% exclusion of taxable gain;