Free tool
QSBS §1202 Exclusion Calculator
If your Qualified Small Business Stock qualifies under IRC §1202, a large slice of your gain can be federally tax-free — capped per issuer at the greater of the §1202 dollar floor or 10× your basis, for stock held more than 5 years. See your estimated exclusion, the residual federal tax, and the state tax you still owe.
Your QSBS sale
Estimate only — not financial or tax advice. This tool assumes your stock qualifies under IRC §1202; it does not confirm eligibility (C-corp, original issue, gross-assets test, business type). Confirm with a qualified CPA.
Your §1202 exclusion
- Taxable remainder
- $1,900,000
- Federal tax on remainder (LTCG + NIIT)
- $440,530
- Federal tax saved by §1202
- $2,380,000
- State tax still owed
- $1,568,870
Your state does not conform — state taxes the full gain. Based on tax year 2025 rates and the IRC §1202 cap (greater of the dollar floor or 10× basis). Federal tax on the remainder is a long-term capital gain plus NIIT where applicable; eligibility is assumed, not verified.
Model your full equity picture in the equity tax calculator
QSBS §1202 FAQ
What is the QSBS §1202 exclusion?
IRC §1202 lets eligible holders of Qualified Small Business Stock (QSBS) exclude capital gain from federal income tax when the stock is sold. The exclusion is capped per issuer at the greater of the statutory dollar floor or ten times your adjusted basis in that company’s stock. The stock must generally be held more than five years.
How is the §1202 exclusion cap calculated?
For each company whose QSBS you sell, the cap is the greater of the IRC §1202 dollar floor or 10 times your adjusted basis in that issuer’s stock. Gain up to that cap is excluded from federal tax; any gain above it is taxed as a long-term capital gain. This tool applies the cap to the figures you enter — it does not verify eligibility.
Do I still owe state tax on excluded QSBS gain?
Usually, yes. Most states do not conform to IRC §1202, so they tax the full gain even when it is federally excluded — the engine applies your state’s conformity. New Jersey is a notable change: under P.L. 2025, c.67 it conforms to federal §1202 for sales in tax years beginning on or after 2026, so the year of sale matters there.
What are the QSBS eligibility requirements?
§1202 is fact-specific. The stock must be acquired at original issue from a domestic C-corporation, the corporation must meet the aggregate gross-assets test (it must have been a qualified small business when the stock was issued), the business cannot be in an excluded field (such as many professional services or finance), and you generally must hold the stock more than five years. This tool assumes your stock qualifies — confirm eligibility with a CPA.
Is this a substitute for tax advice?
No. This is a free estimate based on tax-year 2025 rates and the §1202 cap formula. It does not confirm QSBS eligibility, handle partial-exclusion vintages, rollovers under §1045, or your full situation. Consult a qualified tax professional before relying on a §1202 exclusion.
Planning an exit? Read the QSBS deep dive or model your full equity picture in the equity tax calculator.