A US startup founder selling a $12,000,000 block of stock on 2029-11-01 instead of waiting until 2030-09-16 pays $946,050 in federal tax they did not have to pay. Same company, same buyer, same shares. The only thing that changed is which side of an anniversary the closing landed on.
Section 1202 used to be a single rule, and most people still carry that rule in their head: hold qualified small business stock for more than five years and the gain is excluded, up to $10 million or ten times basis, and only if the issuer's aggregate gross assets were under $50 million when the stock was issued. Below five years you got nothing at all.
The One Big Beautiful Bill Act, signed 2025-07-04, replaced that cliff with a staircase for stock acquired after that date. Hold more than three years and 50% of the gain is excluded. More than four years, 75%. More than five years, the full 100%. The per-issuer cap went from $10 million to $15 million, or ten times basis if that is larger, and the issuer's gross-asset ceiling at issuance went from $50 million to $75 million. Both dollar figures start adjusting for inflation in 2027.
Stock acquired on or before 2025-07-04 did not move. It stays on the original regime, and rolling or exchanging it does not convert it. So a cap table now carries two rule sets at once, split by a single date, and the answer for two blocks in the same company can be completely different.
This is exactly the kind of question a chatbot answers confidently and wrongly. Most model training predates the amendment. Ask about a four-year hold and you get the old cliff: 0% excluded, everything taxable. On the scenario above that answer produces $2,832,200 of federal tax on $11,900,000 of gain. The real answer is a 75% tier, $8,925,000 excluded, $2,975,000 still taxable, and $946,050 of tax. The gap is not a rounding error.
QSBS Anniversary Check is a browser extension and a free web page that run the same calculation. You give it the acquisition date, the planned closing date, proceeds, basis and the issuer's gross assets at issuance. It picks the regime from the acquisition date rather than assuming one, applies the tier the closing date actually earns, caps the excluded gain at $15 million or ten times basis, taxes the non-excluded slice of a partially excluded gain at the 28% Section 1202 rate, taxes anything above the cap at 20%, adds 3.8% net investment income tax, and lets a non-conforming state such as California tax the whole gain anyway.
Then it does the part that changes behaviour: it prints the date your next tier opens and the gap between signing now and signing after it. Above, that is 2030-09-16 and $946,050 — a number that belongs in the board conversation about timing.
Change the inputs and the answer moves. A block acquired 2024-03-01 and sold 2028-10-01 is pre-OBBBA stock at four and a half years, so the tier is 0%, the tax is $1,422,050, and waiting until 2029-03-02 takes it to zero. A $60,000,000 exit on stock acquired 2025-08-01 and sold 2031-01-15 clears five years, so the full 100% applies, but it only reaches the $15,000,000 cap; the remaining $44,500,000 is ordinary long-term gain, and a 13.3% state rate on the full gain brings the total to $18,504,500.
Every calculation is free, in the popup and on the web page, with no key, no limit and no locked result. The $60 key adds a different axis: CSV export of the blocks you have priced, for your CPA and your 8949 workpaper, and a Chrome alarm on each tier anniversary so a closing is never scheduled into the wrong tier by accident.
Free in your browser (the same rules): https://getreadystack.com/tools/qsbs-tier-anniversary-check
Licence ($60, once, 7-day refund): https://buy.polar.sh/polar_cl_7V4WkgRxUef757N44mmrdRNcROuyAndPDjOW401E7Im
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