What Is the QSBS Per-Issuer Cap? (w/Examples) + FAQs

Quick Answer

The QSBS per-issuer cap is the most gain you can exclude from tax on one company’s stock under Section 1202: the greater of $15 million or 10 times your basis for stock acquired after July 4, 2025, or the greater of $10 million or 10 times basis for stock acquired before July 5, 2025.

The per-issuer cap is the ceiling that decides how much of your startup-stock profit escapes federal capital gains tax — and it resets per company, not per investor, which is the single fact that changes your whole tax bill at exit. Getting the cap wrong means paying tax on gain you could have kept, often a seven-figure mistake on a single sale.

This article reflects federal rules and state rules (California and New Jersey highlighted) as of June 2026 and covers tax years 2025 and 2026. Tax law changes — confirm current figures before you file. The Tax Foundation notes that QSBS lets qualifying founders and investors exclude up to 100% of eligible gain, a benefit few other parts of the tax code match.

Here is what you will learn:

💰 How the “greater of $15 million or 10× basis” math actually works, with dollar-by-dollar examples.
📅 Why your stock’s acquisition date — before or after July 5, 2025 — sets a different cap on the very same company.
🧩 How “stacking” and “packing” can legally multiply or raise your cap beyond the headline number.
🗺️ Whether your state honors the exclusion (California and New Jersey do not).
⚠️ The seven costly mistakes that quietly shrink or destroy your exclusion before you ever sell.

What “Per-Issuer” Really Means

The per-issuer cap is a limit measured per company whose stock you own, not per taxpayer and not per sale. The word “issuer” means the C corporation that originally issued the stock to you. Under Section 1202(b)(1), your excludable gain from each separate issuer is capped on its own, so owning stock in three qualifying companies gives you three separate caps.

This matters because people assume they get one lifetime QSBS limit. They do not. If you hold qualified stock in two unrelated startups, you can exclude up to the full cap on each one. The consequence of misreading this is huge in both directions: some taxpayers needlessly stop investing thinking they “used up” their exclusion, while others wrongly assume a single sale can shelter unlimited gain.

The cap is the greater of two numbers, tested company by company. The first number is a flat dollar figure ($15 million or $10 million, depending on when you acquired the stock). The second number is 10 times your aggregate adjusted basis in that issuer’s stock disposed of during the year. You take whichever is larger — never both added together.

What you should do about it: build a separate QSBS file for each company you invest in, tracking acquisition date, basis, and gross-asset eligibility. When you sell, you calculate the cap for that issuer alone. That recordkeeping is what turns the theory into an actual refund.

The Two-Part Cap Formula

Section 1202 caps your exclusion at the greater of a dollar amount or a basis multiple, and you must run both halves every time. The law and analysis from RSM confirm this “greater of” structure has anchored the statute since 1993.

The Dollar Prong

The dollar prong is the flat ceiling that applies regardless of what you paid. For QSBS acquired before July 5, 2025, it is $10 million ($5 million if you are married filing separately). For QSBS acquired after July 4, 2025, the One Big Beautiful Bill Act raised it to $15 million, and that figure adjusts for inflation starting in 2027.

The consequence of the date split is real money. A founder who paid almost nothing for stock is governed by the dollar prong, so the difference between the old and new law is a flat $5 million of extra shelter. The common misconception is that selling after July 4, 2025 automatically gives you $15 million — it does not; the acquisition date controls, not the sale date.

The 10x Basis Prong

The basis prong rewards investors who put real money in. It equals 10 times your aggregate adjusted basis in that issuer’s stock that you dispose of during the tax year, as set out in Section 1202(b)(1)(B). This prong did not change under the OBBBA; only the dollar prong rose.

The consequence: if your basis is large enough that 10× exceeds the dollar prong, the basis prong wins. A misconception here is that founders with near-zero basis can use this prong — they cannot, because 10 times almost nothing is almost nothing, so they fall back on the dollar prong. The practical step is to know your true basis, including cash invested and the fair market value of property or services exchanged for stock.

How the Cap Changed Under the OBBBA

The One Big Beautiful Bill Act, signed July 4, 2025, made three linked changes that all turn on the acquisition date of July 5, 2025. The per-issuer dollar cap rose from $10 million to $15 million, the corporate gross-asset ceiling rose from $50 million to $75 million, and a new tiered holding period replaced the old flat five-year rule.

The tiered exclusion is the biggest structural shift. For QSBS acquired after July 4, 2025, holding for at least three years gives a 50% exclusion, at least four years gives 75%, and at least five years still gives the full 100%, per The Tax Adviser. The catch: any gain that is not excluded at the 50% or 75% tiers is taxed at the 28% capital gains rate, not the usual 15% or 20%, and the 3.8% net investment income tax can apply on top.

A critical trap lives in the effective date. Stock acquired before July 5, 2025 keeps the old $10 million cap even if you sell it years later, because the carryover holding period rules block you from “resetting” old stock into the new regime through most exchanges. You can even hold both vintages from the same company, so each block of shares carries its own cap.

What to do about it: pin down the exact acquisition date of every share lot. If you are weighing a new C-corp formation or a fresh raise, the post-July-4-2025 rules are markedly more generous, which may affect timing.

Old Cap vs. New Cap

QSBS feature	Old rule vs. new rule
Per-issuer dollar cap	$10 million before July 5, 2025; $15 million after July 4, 2025, indexed from 2027
Basis multiple prong	10× adjusted basis under both; unchanged by the OBBBA
Holding period for 100%	Flat 5 years (old); tiered 3/4/5 years for 50/75/100% (new)
Corporate gross-asset ceiling	$50 million (old); $75 million (new), indexed from 2027
MFS dollar cap	$5 million (old); $7.5 million (new), half the joint figure

Worked Examples: The Math, Step by Step

Numbers make the cap concrete, so here are full calculations you can copy. Each one tests both prongs and takes the greater.

Example 1 — Founder with tiny basis, new-law stock. Priya founded a C corporation and acquired her shares in September 2025 for $20,000. Five years later she sells for $40 million, a $39.98 million gain. The dollar prong is $15 million; the 10× prong is 10 × $20,000 = $200,000. She takes the greater, $15 million, excludes that fully, and pays tax on the remaining $24.98 million of gain.

Example 2 — Investor with large basis. Marcus invested $3 million in QSBS in 2024 (pre-OBBBA stock). He sells in 2029 for $50 million. The dollar prong is $10 million; the 10× prong is 10 × $3 million = $30 million. He takes the greater, $30 million, so the basis prong tripled his old-law cap. He pays tax only on the $17 million above the cap.

Example 3 — Married filing separately. Dana holds QSBS acquired in 2026 with a $10,000 basis and sells for $20 million. Because she files separately, her dollar prong is $7.5 million (half of $15 million), not the full amount. Her 10× prong is just $100,000, so she excludes $7.5 million and is taxed on the rest — a $7.5 million penalty for the filing status alone.

Which Cap Applies to You?

The right cap depends on a few simple facts about your stock. Use this branch to find your lane before you run the math.

You acquired the stock before July 5, 2025: your dollar prong is $10 million ($5 million if married filing separately), and you need a full 5-year hold for 100% exclusion.
You acquired the stock after July 4, 2025: your dollar prong is $15 million ($7.5 million if married filing separately), and you can get 50% at 3 years, 75% at 4 years, 100% at 5 years.
You paid a large amount for the stock (high basis): check the 10× prong; it may beat the dollar prong and become your real cap.
You own stock in more than one qualifying company: you get a separate cap for each issuer, so total them issuer by issuer.
You live in California or New Jersey: the federal cap still applies for federal tax, but your state will tax the “excluded” gain anyway.

Advanced Planning: Stacking and Packing

Sophisticated owners use two legal techniques to expand the exclusion beyond the headline cap, both explained by Wealthspire.

Stacking multiplies the number of caps. Because the cap is per taxpayer per issuer, gifting QSBS to other taxpayers — adult children, or properly structured non-grantor trusts — gives each recipient their own full cap on the same company. A founder facing a $45 million gain could, in theory, spread shares across three non-grantor trusts and capture three separate $15 million caps. The consequence of doing it wrong is severe: a defective trust, a grantor trust, or a gift made too close to the sale can be collapsed by the IRS, so this needs an estate attorney well before any exit.

Packing raises the basis prong. By contributing appreciated property to the corporation at original issuance, your basis is set at the property’s fair market value under Section 1202(d)(2)(B), which can push your 10× prong above the dollar prong. The misconception is that packing is unlimited — it is not, because contributions can affect the company’s gross-asset test and its QSBS eligibility itself. The step to take: model both the basis benefit and the gross-asset impact with a tax adviser before contributing.

Three Common Scenarios

These three situations cover most readers searching this topic. Each shows the cap in action and the result.

Founder selling new-law stock

Your situation	What happens to your gain
Acquired stock after July 4, 2025, near-zero basis, sold at $30M after 5 years	Dollar prong of $15M wins; you exclude $15M and pay tax on the other $15M
Same stock sold after only 3 years	Only 50% of eligible gain is excluded, and the taxable half is hit at the 28% rate

Angel investor with real money in

Your situation	What happens to your gain
Invested $2M pre-July 2025, sold at $25M after 6 years	10× prong ($20M) beats the $10M dollar prong; you exclude $20M
Same $2M invested after July 4, 2025	Compare $20M (10×) to $15M dollar prong; the $20M basis prong still wins

Multi-company portfolio holder

Your situation	What happens to your gain
Owns QSBS in three unrelated startups, sells all	Each issuer gets its own cap; you total three separate exclusions
All three are the same business under common control	They may be treated as one issuer, collapsing you to a single cap

Named Examples in Action

Sofia, the serial founder. Sofia sold her first startup in 2023 and excluded $10 million under the old cap. In 2026 she starts a new C corporation, acquires QSBS, and learns her new company carries its own fresh $15 million cap because the limit is per issuer. Her prior exclusion does not reduce it.

Raj, the early employee. Raj exercised options in March 2025 (pre-OBBBA stock) and sells in 2031 for $12 million on a $50,000 basis. His dollar prong is $10 million, not $15 million, because his acquisition date predates July 5, 2025. He excludes $10 million and is taxed on $2 million.

The Chen family, stacking. Before selling, the Chens gift QSBS to two properly drafted non-grantor trusts for their children, set up well in advance with an estate attorney. At sale, each trust claims its own $15 million cap, and the family shelters far more than a single taxpayer could.

Mistakes to Avoid

Confusing acquisition date with sale date. Selling after July 4, 2025 does not grant the $15 million cap; pre-July-5-2025 stock keeps the $10 million ceiling, costing up to $5 million of shelter.
Adding the two prongs together. The cap is the greater of the dollar figure or 10× basis — never the sum — and treating it as a sum overstates your exclusion and triggers IRS adjustments.
Assuming one lifetime cap. The limit is per issuer, so wrongly believing it is used up makes people overpay tax on a second company’s gain.
Ignoring married-filing-separately halving. MFS cuts the dollar prong to $7.5 million (or $5 million for old stock), and missing this leads to a filing that the IRS will correct upward.
Skipping the gross-asset test. If the company exceeded $50 million ($75 million for new stock) before your shares were issued, the stock may not be QSBS at all, voiding the entire exclusion.
Selling too early under the new tiers. A sale at 3 or 4 years gives only 50% or 75% exclusion, and the taxable remainder is taxed at 28%, not 15% or 20%.
Setting up stacking trusts too late. Trusts created on the eve of a sale, or accidentally drafted as grantor trusts, can be disregarded by the IRS, erasing the extra caps.

Pros and Cons of Relying on the Cap

Pros

The exclusion can wipe out tax on millions in gain, because a 100% exclusion at five years means zero federal capital gains tax on the capped amount.
The cap resets per company, so active founders and investors get a new ceiling with each qualifying business.
The OBBBA’s $15 million cap and tiered exclusion give faster, larger benefits, since you no longer must wait a full five years for partial relief.
The 10× basis prong rewards larger investments, letting big investors exclude far more than the flat dollar figure.
Stacking and packing offer legal ways to expand the benefit, because the per-issuer, per-taxpayer design allows planning with trusts and basis.

Cons

The five-year wait for 100% exclusion ties up capital, since selling earlier sacrifices part of the benefit.
State non-conformity can claw back the savings, because states like California tax the gain regardless of the federal exclusion.
Eligibility is fragile, as a single failed test (gross assets, active business, original issuance) voids everything.
The rules are complex and date-sensitive, so a recordkeeping slip on acquisition dates can cost millions.
Advanced planning needs costly professionals, because trusts and basis strategies require attorneys and CPAs to hold up.

Does Your State Follow the Cap?

Federal QSBS rules do not bind the states, and conformity varies sharply, as flagged by The Tax Adviser. Most states that have an income tax follow the federal exclusion, but two large states do not.

California does not conform to Section 1202 at all, so even gain you fully exclude on your federal return is 100% taxable by California, up to its top 13.3% rate. New Jersey likewise does not recognize the federal QSBS exclusion, taxing the gain under its own rules. The consequence is stark: a California founder excluding $15 million federally can still owe roughly $2 million to the state on that same gain.

If you live in a no-income-tax state such as Texas, Florida, Washington, or Nevada, this question is moot — there is no state income tax on the gain, so the federal exclusion is the whole story. The step to take: confirm your state’s treatment with a state-specific adviser before you plan an exit around the federal cap, and weigh residency timing if a move is realistic and genuine.

What to Do Next

Pull the exact acquisition date and original cost for every block of QSBS you own, separating pre- and post-July-5-2025 lots.
Confirm the company met the QSBS tests at issuance — C corporation, gross assets under the limit, active qualified business, original issuance to you.
For each issuer, run both prongs (dollar vs. 10× basis) and take the greater to find your real cap.
Track your holding period against the 3/4/5-year tiers (new stock) or the 5-year rule (old stock) before you commit to a sale date.
If your gain may exceed the cap, talk to an estate attorney about stacking trusts well before any sale, and a CPA about packing.
At sale, report the transaction on Form 8949 and Schedule D, entering the exclusion as a negative adjustment with code “Q,” and keep your eligibility records for the life of the position.

This article is educational and is not a substitute for advice from a licensed CPA, tax attorney, or estate attorney for your specific situation. A QSBS exit involving large gain, multiple share lots, trusts, or a non-conforming state is complex enough that professional help — typically a few thousand dollars in fees against a seven-figure tax benefit — is well worth it.

FAQs

Is the QSBS per-issuer cap the same for every company I own? No. Each qualifying issuer gets its own separate cap, so owning QSBS in three companies gives you three independent caps, not one shared limit across them all.

How much can I exclude under the cap in 2026? The greater of $15 million or 10 times your basis for stock acquired after July 4, 2025. Stock acquired earlier keeps the greater of $10 million or 10× basis.

Does selling after July 4, 2025 give me the $15 million cap? No. The acquisition date controls, not the sale date. Stock you bought before July 5, 2025 keeps the $10 million cap even when sold years later.

Do I add the dollar amount and the 10x basis together? No. You take the greater of the two figures, never their sum. Whichever number is larger becomes your cap for that issuer that year.

What is the cap if I am married filing separately? $7.5 million for stock acquired after July 4, 2025 (or $5 million for older stock), which is half the joint dollar prong. The 10× basis prong is unchanged.

Can I exclude 100% of my gain if I sell before five years? No. For new-law stock, three years gives 50% and four years gives 75%; only a five-year hold reaches 100% exclusion.

Does California tax gain I exclude federally? Yes. California does not conform to Section 1202, so QSBS gain you exclude on your federal return is fully taxable by California at rates up to 13.3%.

What is “stacking” in QSBS planning? Multiplying your number of caps by gifting QSBS to other taxpayers or non-grantor trusts, each of which then claims its own full per-issuer cap on the same company’s stock.

What corporate gross-asset limit applies to the cap? $75 million for stock issued after July 4, 2025, up from $50 million. The company cannot exceed this immediately before or after issuing your shares.

Which form do I use to claim the QSBS exclusion? Form 8949 and Schedule D. You report the sale, then enter the excluded gain as a negative adjustment using code “Q,” keeping eligibility records on file.

Is unexcluded QSBS gain taxed at normal capital gains rates? No. Gain above the cap, and the non-excluded portion at the 50% and 75% tiers, is taxed at 28%, plus the possible 3.8% net investment income tax.

Can the same company count as two issuers? No. A single corporation is one issuer, and related entities under common control can be combined, so you cannot split one business to claim multiple caps.

This article reflects federal rules and California and New Jersey rules as of June 2026 and covers tax years 2025 and 2026. Word count: approximately 3,500.

Related reading