Overview
- OBBBA replaces the five-year all-or-nothing rule for stock issued after July 4, 2025, with a tiered exclusion regime of 50% at three years, 75% at four years and 100% at five years.
- The per-issuer gain exclusion cap rises from $10 million to $15 million with inflation indexing after 2026 and the gross-asset limit increases from $50 million to $75 million with adjustments from 2027.
- A new tacking provision allows original QSBS holding periods to carry over into stock received in tax-free reorganizations to meet phased exclusion thresholds.
- California, Pennsylvania, Mississippi and Alabama remain nonconforming to the federal QSBS rules, while New Jersey will conform for tax years beginning January 1, 2026, with limited retrospective access.
- Advisors are recalibrating C-corporation structures, equity incentive plans and exit strategies as they seek clarity on exact effective dates and implementation rules.