2 minute read | June.17.2025
On June 16, 2025, the Senate Finance Committee introduced a bill that would significantly expand the benefits available for qualified small business stock (QSBS). The expanded QSBS benefits apply to stock acquired after the enactment of the bill (the “Applicable Date”), while leaving the existing QSBS benefits unchanged for stock acquired on or before the Applicable Date.
As a result of this development, parties that are near completion of transactions with QSBS implications should carefully consider postponing closing until there is more clarity on the potential law changes. The following chart summarizes the two different sets of QSBS rules that would apply depending on when the stock in question was acquired:
Stock Acquired On or Before the Applicable Date | Stock Acquired After the Applicable Date | |
Required Holding Period | Must be held for more than 5 years | Must be held for at least 3 years |
Percentage of Gain Excluded from Gross Income |
If acquired after August 10, 1993 and before February 18, 2009: 50% If acquired after February 17, 2009 and before September 28, 2010: 75% If acquired after September 27, 2010: 100% |
If held for 3 years: 50% If held for 4 years: 75% If held for 5 years or more: 100% |
Per-Issuer Limitation | $10,000,000 | $15,000,000, adjusted for inflation beginning in 2027 |
Aggregate Gross Asset Limit | $50,000,000 | $75,000,000, adjusted for inflation beginning in 2027 |