On June 16, 2025, the Senate Finance Committee (SFC) released a revised version of the “One Big Beautiful Bill Act” (SFC bill), following the House’s passage of the bill on May 22. The SFC bill would significantly expand the tax exemption under Internal Revenue Code 1202 for qualified small business stock (QSBS) acquired after the enactment date of the final legislation (effective date).
The QSBS exclusion is an increasingly popular tax benefit for founders and investors in early-stage companies. Provided that certain holding period and other requirements are satisfied, the QSBS exclusion permits stockholders to exclude taxable gain from federal income tax, subject to the caps described below. The SFC bill would enhance these benefits and relax certain restrictions, making QSBS even more attractive for early-stage investors.
The authors
Eileen Marshall
Stephanie Gentile
Hardy Zhou
