The new tax bill, known as the "One Big Beautiful Bill", modifies tax provisions for small businesses by expanding the definition to include startups with less than $75 million in assets. The tiered system now allows tax-free profits after three years, with increasing exemptions thereafter. This change makes it easier for founders and investors to cash out early without facing a heavy tax burden, promoting faster exit strategies and reinvestment into new ventures. The updates are designed to support small business growth and investment.
The updates to Qualified Small Business Stock rules expand the definition of a small business to include companies with less than $75 million in gross assets, up from the previous $50 million cap. This change allows founders and investors to benefit from tax-free profits much sooner.
Startup founders and investors faced a five-year capital gains tax exemption restriction, which discouraged early exits. The new tiered system provides 50% tax-free profits after three years, 75% after four, and complete tax exemption after five years, incentivizing faster exits.
Collection
[
|
...
]