QSBS Calculator
Section 1202 Tax Savings
Updated December 2025
IRC §1202 current
Find out if you're about to save $500K—or lose it.
Most founders don't check their QSBS status until they're 60 days from closing. By then it's too late to fix.
The date that matters
Your 5-year clock started on a specific date. Most people guess wrong. Options? It's not your grant date. Restricted stock? Depends on your 83(b). RSUs? Not until delivery.
Get this wrong and you sell early. Sell early and you lose everything.
QSBS Savings Calculator
Estimate your Section 1202 tax savings in 60 seconds
Your Stock
Key Dates
Your holding period starts at EXERCISE, not grant. This is the #1 mistake people make.
Value
What you paid, or the value included in your income
Your Location
Your state at time of sale determines tax treatment
The short version
Sell your startup stock after 5 years and you might owe zero federal tax on the gain. Up to $10M, sometimes more.
The catch: most people screw it up.
They think they qualify when they don't. They sell 2 months early. They're in California and don't realize the state doesn't care about QSBS. They find out during the wire transfer that their $400K tax bill is real.
This calculator won't tell you everything. But it'll tell you the three things that matter most: when your clock actually started, how much you'd save, and whether your state is going to take it anyway.
The mistake that costs people millions
Here's what I see constantly: a founder gets options in 2019, exercises in 2023, and tries to sell in 2025 thinking they're qualified.
They're not. Not even close.
Your clock starts at EXERCISE. Not grant. Not vesting. Exercise.
If you exercised in 2023, you can't sell until 2028. Period. Doesn't matter that you've been at the company for 8 years.
Real example: Last year, an employee at a YC company exercised their options on December 15, 2019 and tried to sell on December 10, 2024—thinking 5 years had passed. It hadn't. Five years from December 15, 2019 is December 16, 2024. They were 6 days early. The entire QSBS benefit was lost. $340K in taxes they didn't need to pay.
The calculator above will tell you your actual qualification date. If you don't like the answer, there's nothing to be done—except wait.
When your clock starts:
- Stock options (ISOs/NSOs): Exercise date. Not grant.
- Restricted stock with 83(b): Grant date.
- Restricted stock without 83(b): Vesting date. (Honestly, if you didn't file the 83(b), you probably forgot.)
- RSUs: Delivery date. You can't file 83(b) on RSUs.
- SAFE/convertible note: Conversion date.
- Inherited stock: Immediately qualified. Lucky you.
If you're in California, I have bad news
California doesn't recognize QSBS. At all.
You can qualify for the federal exclusion. You can save $500K in federal taxes. And California will still hand you a bill for 13.3% of your gain.
On a $2M gain, that's $266,000. To California. Even though you owe the IRS nothing.
This isn't a bug in the tax code—it's a policy choice. California wants the revenue. They're not going to change.
Real example: I talked to a founder who moved from SF to Austin specifically for the QSBS state tax benefit. Six weeks before their exit. California audited them anyway, argued they hadn't "really" moved, and sent a bill for $180K. The lesson: if you're going to relocate, do it right—and do it early. California's Franchise Tax Board is aggressive.
Some people move before their exit. That's a real option, but it's complicated (California's exit tax rules are aggressive, and you need to actually move, not just pretend). Talk to a tax attorney if you're considering it.
States that don't recognize QSBS
- California (13.3%)
- Pennsylvania (3.07%)
- Alabama (5%)
- Mississippi (5%)
States with no income tax
- Texas, Florida, Nevada, Wyoming
- Tennessee, South Dakota, Alaska
- Washington*, New Hampshire*
* WA has 7% cap gains tax over $270K
What this tells you (and what it doesn't)
This calculator answers three questions:
Most people get this wrong, especially with options.
The real number. Federal taxes, based on your gain.
Spoiler: if you're in California, nothing good.
What this DOESN'T tell you:
Whether your company qualifies. That depends on things like: Was it a C-corp when you got your shares? Did it have under $50M in gross assets at that moment? Is the business actually a "qualified trade or business"? (Consulting companies often aren't. Seriously.)
We can't check those from here. You'll need your company's records—or a conversation with someone who has them.
Real example: In 2024, a Series B founder lost $2.3M in QSBS benefits because their company crossed $50M in gross assets one week before his shares were issued. The calculator would have shown a big savings number. He would have been wrong.
Check with your CFO. Or don't—but know the risk.
What this calculator checks
- ✓Your holding period start date
Based on stock type, acquisition method, and 83(b) status
- ✓Your exclusion cap
$10M floor or 10× basis, whichever is greater
- ✓Your state's QSBS treatment
Conformity status for all 50 states + DC
- ✓Federal tax savings estimate
Based on standard LTCG + NIIT rates (23.8%)
What this calculator does NOT check
- ✗C-corporation status
Was your company a C-corp when you got your shares? Ask your CFO or check your stock agreement.
- ✗$50M gross assets test
Did the company have under $50M in assets at issuance? This is in your company's tax records.
- ✗Qualified trade or business
Is the business type eligible? Consulting, finance, law, hospitality = usually no.
- ✗Original issuance requirement
Did you get stock directly from the company? Secondary purchases don't qualify.
These require documentation you have—we don't. A tax professional can verify them before your exit.
See full methodology →