QSBS 2.0: Section 1202 Post-OBBBA Expansion
QSBS 2.0: Section 1202 Post-OBBBA Expansion
A strategic guide to the $15M cap, new tiered exclusions, and the asset threshold shift for modern founders.
Executive Summary
- The 2025 Pivot: The One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025, has significantly expanded QSBS benefits.
- New Limits: For issuances after 07/04/2025, the exclusion cap is raised to $15M with tiered benefits starting from Year 3.
- Asset Threshold: The gross asset test has been relaxed to $75M, allowing more high-growth firms to qualify.
Dual-Regime Complexity
Benefits depend strictly on the issuance date. Pre-07/04/25 follows Legacy Law ($10M/$50M), while Post-07/04/25 follows OBBBA. Note that states like California may not recognize these federal exclusions.
Mechanic: Tiered Exclusion (OBBBA)
50%
Year 3 Exit
75%
Year 4 Exit
100%
Year 5+ Exit
$75M
Asset Cap
Simulation: Exit Value ($15M Scenario)
Net Proceeds Comparison (Federal Tax Impact)
| Metric | Legacy (Pre-OBBBA) | OBBBA (New Law) |
|---|---|---|
| Exclusion Cap | $10M (Fixed) | $15M (Adjustable) |
| Min. Holding | 5 Years | 3 Years (Tiered) |
| Asset Test | $50M Threshold | $75M Threshold |
“The OBBBA has transformed QSBS from a binary tax break into a flexible liquidity tool for the modern entrepreneur.”