Positive for Investors- QSBS

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QSBS- The Qualified Small Business Stock exclusion is something private investors, especially Seed investors like Social Leverage, follow closely. The upgrades in the One Big Beautiful Bill Act now allows for a bunch of positive changes that will allow founders and investors to take advantage of tax free returns!

What are the new changes?

• Previously, the cap on exclusions was at $10m, now it $15m!

• Previously, you had to hold your investment for at least 5 years to qualify. Now, after 3 years, you get a 50% exclusion and 4 years, 75%. Then 100% still holds true at 5 years.

• Previously companies only qualified if they were valued at under $50m, now that has been lifted to $75m.

These changes are big for investors as you effectively eliminate federal capital gains taxes if you meet the above criteria. In many states, QSBS is also recognized, eliminating your state tax as well. Unfortunately, California does not recognize QSBS, so I will continue to pay the sunshine Tax.

Talk to an accountant, do your research, and make sure you understand the details of QSBS because this is a great benefit for those who invest in early-stage companies. We are constantly telling our founders and investors of this benefit, as it’s something that makes early-stage investing even more enticing.

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