Section 1202 figures are as of July 2025 (OBBBA: 50%/75%/100% at 3/4/5 years with a $15M cap for stock acquired on or after July 4, 2025; $10M cap and 5-year rule before that). The cap is inflation indexed, so confirm the current figure before relying on it. This is an estimate, not tax advice.
The U.S. has no large-shareholder category
United States tax law draws no line between a controlling shareholder and a small retail investor. There is no ownership percentage or holding value at which a share sale suddenly becomes taxable; every shareholder reports gains on Schedule D and Form 8949 on the same terms. What changes the outcome is the character of the stock and how long it was held, not the size of the stake.
Rules as of 2026 β check before relying on these figures. The One Big Beautiful Bill Act (enacted July 4, 2025) changed Section 1202 for stock acquired on or after that date: a tiered exclusion of 50% at three years held, 75% at four years and 100% at five years, a per-issuer cap of $15 million (indexed for inflation from 2027) and a gross-asset ceiling of $75 million. Stock acquired before July 4, 2025 keeps the earlier rules β five years held for the full exclusion and a $10 million cap. This calculator defaults to the earlier rules, so if your stock was acquired under the new law, enter the exclusion percentage and cap that apply to you.
The one exclusion that does turn on the company is Section 1202 qualified small business stock. Stock acquired at original issue from a qualifying C corporation and held for the required period can have a share of the gain excluded from tax, capped at the greater of a dollar limit or a multiple of basis. The exclusion percentage, the dollar cap and the holding requirement have all been amended by statute, so they are editable fields here rather than fixed numbers.
Whatever is not excluded is taxed at the long-term rate if held over a year, or at the ordinary rate if not, and the net investment income tax can apply once modified adjusted gross income passes a statutory threshold. Gain properly excluded under Section 1202 is not net investment income. Figures are on a 2026 basis; confirm current rules in the Form 1040 and Schedule D instructions.
This is an estimate, not a filing position. QSBS qualification is fact-intensive, and the gross asset test, active business requirement, redemption rules, state conformity and AMT treatment all matter. Confirm eligibility with a CPA or tax attorney before relying on the exclusion.
Frequently asked questions
No. The percentage you own does not create or remove a tax. Holding period and whether the stock qualifies under Section 1202 are what change the rate.
Up to the greater of a dollar cap or a multiple of your basis in the stock, per issuer. Anything above that cap is taxed as an ordinary capital gain.