QSBS Exclusion (Section 1202) Tax Exclusion Calculator & Eligibility
QSBS Exclusion (Section 1202) is a exclusion tax exclusion for 2026 with up to $10,000,000. Confirm eligibility, keep the required records, and use Form 8949, Schedule D when claiming it.
Quick Answer
QSBS Exclusion (Section 1202) is a exclusion tax exclusion for 2026 with up to $10,000,000. Confirm eligibility, keep the required records, and use Form 8949, Schedule D when claiming it.
Use this page to estimate federal savings, compare tax brackets, check required forms, and avoid common filing mistakes before you claim it.
Eligibility
Investors in qualified small business stock
Tax Savings Calculator
Estimated Tax Savings
$1,100
At the 22% tax bracket, a $5,000 deduction saves you $1,100 in taxes.
Savings by Tax Bracket
Requirements
- 1C-corp with <$50M assets
- 2Held 5+ years
- 3100% exclusion up to $10M
Common Mistakes to Avoid
- !Not meeting C-corp requirement
- !Selling before 5 years
IRS Source Check & Audit File
Primary source: IRS Publication 550: Qualified Small Business Stock. QSBS treatment depends on original issuance, C corporation status, active business requirements, holding period, acquisition date, and the issuer-level gain exclusion cap.
Keep the source document and records with the return for the year claimed. If your facts involve business entities, foreign accounts, disaster losses, or retirement conversions, have a CPA or Enrolled Agent review the filing position before submitting.
Methodology & Official Sources for QSBS Exclusion (Section 1202)
How the QSBS Exclusion (Section 1202) works: This federal tax exclusion can keep qualifying income or gain out of taxable income when all current-year eligibility rules are met. The exact savings depend on your marginal tax rate, filing status, income, and documentation. Eligibility, limits, and phaseout thresholds are governed by the Internal Revenue Code and updated through IRS forms, instructions, publications, notices, and revenue procedures.
Authoritative sources:
- IRS Publications — official deduction guides
- IRS Forms & Instructions — current year tax forms
- Internal Revenue Code — primary tax law authority
- IRS Interactive Tax Assistant — eligibility self-check
- Taxpayer Advocate Service — IRS dispute resolution
- IRS Free File — free tax filing for eligible taxpayers
Tax Disclaimer: Tax law is complex and changes annually. The information shown reflects current 2026 IRS guidance. For your specific situation — especially if you have business income, foreign accounts, or unusual deductions — consult a licensed CPA, Enrolled Agent (EA), or tax attorney. Errors in deduction claims can trigger audits.
Reviewed by Brazora Monk · Last updated 2026
Required Tax Forms
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Planning estimate, not tax advice
LevyIO calculators are educational planning tools. Actual federal, state, payroll, property, sales, and local tax results can change with filing status, credits, deductions, residency, employer withholding, address-level rates, and current forms. Verify final filing positions with IRS or state guidance, payroll records, tax software, or a qualified tax professional.
Frequently Asked Questions
What is the QSBS Exclusion (Section 1202)?
Exclude up to $10M or 10x basis of gains from qualified small business stock.
Who is eligible for the QSBS Exclusion (Section 1202)?
Investors in qualified small business stock
How much can I save with the QSBS Exclusion (Section 1202)?
The average tax savings is $100,000 per year. The maximum deduction is $10,000,000. Your actual savings depend on your tax bracket and qualifying amount.
What forms do I need for the QSBS Exclusion (Section 1202)?
You'll need to file Form 8949 and Schedule D to claim this deduction.
What are common mistakes with the QSBS Exclusion (Section 1202)?
Common mistakes include: Not meeting C-corp requirement; Selling before 5 years. Always double-check requirements before filing.
Is the QSBS Exclusion (Section 1202) worth claiming?
With average savings of $100,000, the qsbs exclusion (section 1202) is highly valuable. Make sure you meet all eligibility requirements.