Updated December 2025
How This Calculator Works
Methodology, sources, and limitations. Last updated December 2025.
Holding Period Calculation
Your QSBS holding period start date depends on how you acquired your shares. Here's the logic we use:
| Stock Type | Start Date | Authority |
|---|---|---|
| Common stock (purchased) | Purchase date | IRC §1202(c)(1) |
| ISOs/NSOs (exercised) | Exercise date | IRC §1202(c)(1)(B); Rev. Rul. 2001-26 |
| Restricted stock with 83(b) | Grant date | IRC §83(b); Treas. Reg. §1.83-4(a) |
| Restricted stock without 83(b) | Vesting date | IRC §83(a) |
| RSUs | Delivery/vesting date | IRC §83(a); no 83(b) election possible |
| SAFE/Note conversion | Conversion date | IRC §1202(c)(1)(B) |
| Inherited stock | Immediate qualification | IRC §1202(h)(2)(C) |
The 5-year holding period requirement means you must hold for more than 5 years—5 years and 1 day is the minimum qualifying period.
Exclusion Calculation
Exclusion Percentage
Based on stock acquisition date:
- Before February 18, 2009: 50% exclusion
- February 18, 2009 – September 27, 2010: 75% exclusion
- After September 27, 2010: 100% exclusion
Source: IRC §1202(a)
Maximum Exclusion
The maximum QSBS exclusion is the greater of:
- $10,000,000, OR
- 10× your adjusted basis in the stock
This is calculated per issuer. You can have QSBS in multiple companies.
Source: IRC §1202(b)(1)
Tax Rate Assumptions
Federal Tax Estimate
We assume:
- 20% long-term capital gains rate (top bracket)
- 3.8% Net Investment Income Tax (NIIT)
- Total: 23.8%
Your actual rate may differ based on income level and filing status. Lower-income taxpayers may qualify for 0% or 15% LTCG rates.
State Tax Estimates
State tax estimates use top marginal rates. Your actual rate may be lower depending on your total income.
State Conformity Data
We track state QSBS conformity status based on state revenue code provisions, state tax authority guidance, and published conformity analyses. Data is reviewed quarterly.
States That Do Not Conform
| State | Top Rate | Authority |
|---|---|---|
| California | 13.3% | Cal. Rev. & Tax Code §18152.5 |
| Pennsylvania | 3.07% | 72 P.S. §7303(a)(1) |
| Mississippi | 5% | Miss. Code Ann. §27-7-15 |
| Alabama | 5% | Ala. Code §40-18-14 |
States With No Income Tax
Alaska, Florida, Nevada, New Hampshire*, South Dakota, Tennessee, Texas, Washington*, Wyoming
* New Hampshire has no tax on earned income. Washington has a 7% capital gains tax on gains over $270K (separate from QSBS conformity).
What We Don't Check
This calculator does NOT verify company-level requirements. These require documentation we don't have access to:
C-Corporation Status
The company must be a domestic C corporation at the time of stock issuance and during substantially all of the holding period. S-corps, LLCs, and partnerships do not qualify.
$50 Million Gross Assets Test
The corporation's aggregate gross assets must be ≤$50 million at all times from incorporation through immediately after your stock issuance. This is measured at issuance, not at sale.
Qualified Trade or Business
At least 80% of assets must be used in active conduct of a qualified trade or business. Excluded industries include: professional services (law, health, accounting, consulting), banking, insurance, financing, hospitality, farming, and extractive industries.
Original Issuance Requirement
Stock must be acquired directly from the corporation at original issuance, in exchange for money, property (not stock), or services. Secondary market purchases do not qualify.
Redemption Rules
Certain stock redemptions within 2 years before or after issuance can disqualify QSBS. This requires review of company transaction history.
Disclaimer
This calculator provides educational information about QSBS. It is not tax, legal, or financial advice. QSBS eligibility depends on facts and circumstances that require professional verification. Consult a qualified tax professional before making decisions based on this information.
We are not affiliated with the IRS or any government agency.