Updated July 28, 2026. Quick answer: Three changes, all effective 4 July 2025 and all limited to stock issued after that date: the per-issuer cap rose from $10,000,000 to $15,000,000 (indexed from 2027), the gross-assets ceiling from $50,000,000 to $75,000,000, and a tiered exclusion of 50% at three years and 75% at four was added below the existing 100% at five.
There are now two QSBS regimes running side by side
This is the single most important thing to establish before any other question, and most current coverage skips it. The One Big Beautiful Bill Act changed Section 1202 effective 4 July 2025 — but only for stock issued after that date. Stock issued on or before it stays on the pre-existing rules permanently.
| Issued on/before 4 Jul 2025 | Issued after | |
|---|---|---|
| Per-issuer cap | $10,000,000 or 10× basis | $15,000,000 (indexed from 2027) or 10× basis |
| Gross assets test at issuance | $50,000,000 | $75,000,000 (indexed from 2027) |
| 3 years held | No exclusion | 50% |
| 4 years held | No exclusion | 75% |
| 5+ years held | 100% | 100% |
Most people holding QSBS today are on the old rules, because their stock was issued before July 2025. Anything written before then describes the old regime as current; much written since describes the new one as universal. Both are wrong for half the audience — check your issuance date first.
Why the tiered exclusion matters more than the cap increase
The cap increase helps only people whose gain exceeds $10,000,000 — a small group. The tiered schedule changes the shape of the decision for everyone holding newer stock, because it creates partial benefit where previously there was none. Under the old rules a sale at four years and eleven months excluded nothing at all.
But there is a catch that makes early exit less attractive than the percentages suggest: at three and four years, the portion NOT excluded is taxed at 28% rather than the 15%/20% long-term rates. Selling at four years is not simply 75% as good as five.
What did not change
The 10× adjusted basis alternative (IRC §1202(b)(1)) is untouched, and it still governs whenever ten times your basis exceeds the dollar cap. The qualification tests — C corporation, active business, original issuance, redemption rules — are unchanged.
Sources
IRC §1202(a)(5) (tiered exclusion); IRC §1202(b)(1) (10x basis alternative); new IRC §1202(b)(4) ($15,000,000 cap and inflation indexing from 2027); One Big Beautiful Bill Act, enacted 4 July 2025. Cross-checked against professional analyses from The Tax Adviser (AICPA), Baker Tilly, Holland & Knight, K&L Gates, Mintz, Davis Wright Tremaine and Grant Thornton, July–November 2025.
This states what the cited authority says. It is not tax advice, and Section 1202 qualification turns on facts about the issuing company that no page can verify for you.