As noted in last week’s update, the Senate has released its proposed version of the House’s One Big, Beautiful Bill Act. As we continue to assess the key changes made to the House’s proposal, a notable—and welcome—surprise is the proposed expansion of the Qualified Small Business Stock (QSBS) exclusion. This popular tax incentive allows non-corporate investors to exclude most or all capital gains on stock held for five years in certain C‑corporations.
Specifically, for stock issued after the enactment of the bill, the Senate’s proposal includes several significant changes:
- An increase in the per-issuer lifetime exclusion from $10 million to $15 million
- Indexing the per-issuer lifetime exclusion for inflation
- Redefining the aggregate gross assets test—which is critical for a business to qualify as “small”—to $75 million
- Introducing partial exclusions for stock that has not yet met the five-year holding period requirement
While these changes are not yet law, the startup community will monitor the potential expansion of QSBS closely. As always, we will continue to monitor the progress of this legislation and keep you informed of any important developments. If you have questions or concerns, please reach out to your WG tax advisors for more information.
