QSBS Calculator: Section 1202 Tax Savings Estimator
Discover how much you could save on your startup exit with our comprehensive QSBS tax calculator.
Most startup founders underestimate their exit tax liability and miss millions in potential savings through Qualified Small Business Stock (QSBS) planning. A $40 million exit could trigger ~$9.5 million in federal taxes, or, in the right fact pattern, as little as $0 on eligible QSBS gain.
The difference? Understanding the rules, timing your exit correctly, and leveraging advanced strategies most advisors don’t know exist.
Calculate Your QSBS Tax Savings
This QSBS calculator below is designed for venture-backed founders. It models the core federal QSBS exclusion framework (including the major July 4, 2025 changes), estimates federal + state tax outcomes under simplified assumptions, and highlights potential incremental savings from “QSBS stacking” strategies (highly fact-specific).
Important: The calculator does not verify whether your company or shares legally qualify for QSBS. Instead, you enter the number of QSBS-eligible long-term shares (a subset of your long-term shares) and the tool estimates savings based on that assumption.
KEYSTONE RECOGNITION
How the Interactive QSBS Calculator Works
| Stock issued on or before July 4, 2025 (legacy + classic QSBS) | Stock issued after July 4, 2025 (post-OBBBA QSBS) |
|---|---|
Note: For legacy QSBS (50%/75%), the calculator includes a simplified AMT preference “proxy” rather than a full AMT computation. |
For QSBS issued after July 4, 2025, the calculator models the new tiered structure:
It also models the updated per-taxpayer, per-issuer cap as the greater of $15M (indexed beginning in 2027) or 10× basis, and reflects the updated $75M gross assets threshold conceptually in the explainer language (but does not verify it via inputs). |
- Your Personal Sale Proceeds (stock): Portion of the deal you personally receive for stock (options/wages not modeled here).
- Cost Basis (total): Used for the “10× basis” QSBS cap test (simplified; the calculator allocates basis pro-rata across long-term and short-term shares, and across QSBS-eligible vs non-QSBS gain).
Long-Term vs Short-Term Split
You enter:
- Long-term shares (≥ 1 year)
- Short-term shares (< 1 year)
The QSBS calculator uses your total proceeds and share counts to estimate an implied price per share and split proceeds (and basis) across LT vs ST.
QSBS Inputs
- QSBS-eligible shares (subset of LT): Must be ≤ long-term shares. The calculator uses this to estimate the QSBS-eligible portion of your long-term gain.
- Date stock issued / acquired from the company (QSBS timing): For QSBS, timing is based on original issuance rules. This date determines which federal QSBS regime applies.
Sale date: Defaults to today. Used to determine holding period and the applicable QSBS exclusion percentage.
Tax Liability Breakdown
The Results section shows a Base Case including:
- Final Federal Tax Owed
- Final State Tax Owed (optional)
- Total Tax Owed
- Net Proceeds After Tax
- Effective Federal Rate, Effective State Rate, and Effective Total Rate
Federal rates are simplified and assume top-rate treatment:
- Long-term capital gains modeled at 20% + 3.8% NIIT = 23.8%
- Short-term gain modeled at 37% + 3.8% NIIT = 40.8%
- (Brackets, deductions, phaseouts, filing status, and detailed AMT math are not modeled.)
QSBS Tax Savings
The calculator highlights:
- Baseline QSBS savings (federal) (compared to the same scenario with no QSBS exclusion)
- Baseline QSBS savings (state) (depends on state conformity selection)
QSBS Stacking Opportunity
This calculator is intentionally built to make the “stacking” story visible and concrete:
- Maximum additional stacking savings: An upper-bound estimate assuming enough additional QSBS caps exist to shelter all above-cap QSBS gain (best-case planning lens).
- Modeled additional stacking savings: An incremental savings estimate based on:
- your selected “taxpayer multiplier” (2×, 3×, etc.), or
- “Maximize stacking” (assumes the entire above-cap amount could qualify). Keep in mind that this is often not realistic but is shown to illustrate the maximum optimization.
- a state planning lens applied only to the incremental stacking portion.
The tool also shows:
- “Gains above your standard QSBS cap (modeled)”
- “Additional gain that could qualify with stacking (modeled)”
- “Potential additional federal tax savings (modeled)”
- “Potential additional state tax savings (state lens)”
Finally, it presents a second scenario: “With QSBS Stacking Implemented”
- This “Stacked” scenario equals: Base Case taxes minus the Modeled incremental stacking savings
- The state planning lens affects only the incremental stacking portion (e.g., trusts/additional taxpayers), while your Base Case state tax remains driven by your selected state inputs.
Advanced QSBS Strategies: Beyond the Basic Exclusion
QSBS Multiplication / QSBS Stacking Through Trust-Based QSBS Strategies and Family Gifting
The $10M/$15M cap applies per taxpayer, per issuer. In real planning, strategic gifting and trust structures may create additional QSBS “caps,” which can materially expand the amount of gain eligible for QSBS treatment.
This QSBS calculator models that idea in a simplified way using:
- a taxpayer multiplier, and/or
- a MAX stacking toggle (best-case assumption)
Important basis note:
If your QSBS cap is being driven by 10× basis, incremental stacking can be overstated in naive models because basis may be divided among additional taxpayers/trusts. This calculator takes a conservative approach for modeled stacking in that situation by using the dollar cap (e.g., $10M/$15M) per incremental taxpayer unless MAX stacking is selected.
Trust-Based QSBS Strategies
Non-grantor trusts can be powerful QSBS vehicles in the right circumstances:
- Each trust may have its own taxpayer-level QSBS cap (fact-specific)
- Trust domicile and other facts can drive state tax outcomes
- Can also support multi-generational wealth transfer planning
State-Level QSBS Planning (Optional)
State QSBS Conformity
The QSBS calculator lets you choose:
- Full conform (exclude QSBS like federal)
- No conform (tax QSBS like other gain)
- No income tax (0%)
A small number of states do not conform to federal QSBS treatment; commonly cited examples include California, Pennsylvania, Mississippi, and Alabama.
New Jersey update: New Jersey enacted legislation to conform to federal QSBS for tax years beginning on or after January 1, 2026.
State Planning Lens
(Incremental Stacking Portion Only)
In addition to your Base Case state settings, the QSBS calculator includes a state planning lens used only for the incremental stacking portion (e.g., trusts/additional taxpayers), with options such as:
- Assume no state tax on trusts/additional taxpayers
- Assume full QSBS conformity on the incremental portion
- Use your current state setting
This is an illustrative planning lens and not a residency determination.
Why Timing Matters: Critical QSBS Deadlines
Holding period is the gating item in many QSBS outcomes (and post-July 4, 2025 rules introduce meaningful 3/4/5-year tier planning).
Pre-exit planning often needs to start well before signing LOIs or entering exclusivity because gifting, trust setup, and state residency planning can have timing, gift tax optimization, and substantiation requirements.
When QSBS Planning Goes Wrong: Common Costly Mistakes
Here are common mistakes we see founders make when planning an exit:
| Gross Asset Test Violations Can Eliminate QSBS Entirely | State Residency Errors Can Destroy QSBS Savings at the State Level | Asset Threshold Surprises Create Hidden Non-QSBS Equity |
|---|---|---|
|
A founder assumed their option exercises were routine. But when they exercised and converted to stock a number of years ago, the company had already exceeded the $50 million gross asset threshold. Because QSBS eligibility is tested at the moment stock is issued, those shares never qualified. This founder lost $10 million in eligible gain. |
California-based founder moved to Texas six months before closing a $30 million exit. They believed the move eliminated California tax exposure. However, they failed to fully sever California residency ties, maintaining key connections that triggered audit scrutiny. The California Franchise Tax Board successfully asserted continued residency. The founder owed approximately $4 million in California state taxes that could have been avoided with proper pre-exit residency planning. |
A founder assumed all of their equity qualified for QSBS treatment. In reality, $15 million of stock had been issued after the company crossed the $50 million gross asset threshold, quietly creating a mixed QSBS and non-QSBS cap table. That $15 million portion of the gain was fully taxable, resulting in an unexpected $3.6 million federal tax liability at exit. |
The Bigger Pattern
Most QSBS failures are not caused by obscure technicalities. They stem from:
- Timing errors
- Assumptions instead of documentation
- Treating QSBS as an exit-stage checkbox instead of a long-term strategy
- The most expensive QSBS mistakes are usually made years before the exit, and many times discovered when it’s too late to fix them.
Take the Next Step: Professional QSBS Advisory
Is your exit strategy optimized for maximum tax savings?
The calculator highlights a portion of your potential QSBS savings, but it only scratches the surface. True outcomes depend on proper qualification, disciplined execution, thoughtful structuring, and ongoing compliance.
Why Founders Choose Keystone for QSBS Planning
We work exclusively with venture-backed tech founders navigating $20M+ exits. Our Personal Exit Advisory program provides comprehensive planning well ahead of a liquidity event.
What makes us different:QSBS stacking and multiplication strategies beyond the basic exclusion
Pre-exit relationship building when you need guidance most
Deep tech ecosystem expertise, we speak your language
Holistic planning from tax strategy to wealth management
Emotional transition support for life after exit
Specialization in ultra-high net worth wealth management and a multi-family office approach
Important Disclaimers
This information is for educational purposes only and does not constitute legal or tax advice. QSBS rules are complex and subject to specific requirements and limitations. Consult with qualified tax and legal professionals regarding your specific situation.
About Keystone Global Partners: We specialize in comprehensive exit planning and wealth management for ultra-high-net-worth venture-backed tech founders. Our founder, Peyton, is recognized as one of the leading QSBS specialists in the country, with deep expertise in practical QSBS strategy implementation and advanced tax planning for $20+ million exits.
