If you own or operate a closely held business, there’s a new reason to take a fresh look at your corporate structure. Recent legislation—affectionately nicknamed the “Big Beautiful Bill”—has made significant, favorable changes to the rules for Qualified Small Business Stock (QSBS). These changes open the door to substantial tax savings for business owners who plan ahead.
For those who qualify, the QSBS exclusion allows you to exclude up to 100% of the gain on the sale of qualified stock, up to certain limits. With the Big Beautiful Bill’s recent updates, more businesses may now be eligible, and the potential tax savings are even more compelling.
The headline change is that the gross asset threshold for QSBS eligibility has been increased from $50 million to $75 million for stock issued after July 4, 2025. This allows larger small businesses—particularly those in growth mode—to participate in QSBS planning without inadvertently disqualifying themselves due to valuation.
In addition, the new law introduces tiered gain exclusions for certain holding periods shorter than the traditional five years, creating more flexibility for founders and investors who may need to exit earlier.
Together, these changes mean that more businesses—and more business owners—can structure for QSBS eligibility and enjoy a significantly reduced tax burden on a future sale.
Imagine selling your company after years of hard work and keeping all of your gain—federal tax-free—on up to $10 million per shareholder (and in some cases, even more). QSBS has always been one of the most powerful tax planning tools available for entrepreneurs, but many owners have been shut out simply because their business was not structured as a C corporation or exceeded the old asset threshold.
With these changes:
But here’s the key: QSBS only applies to stock issued by a domestic C corporation. If your business is currently an LLC or an S corporation, you are not eligible unless you restructure.
If your business is currently an LLC or a Subchapter S corporation, you may be able to convert to a C corporation in order to issue QSBS-eligible stock. While the decision to convert should be made carefully—balancing QSBS benefits against other tax considerations—the process generally involves:
QSBS eligibility starts when the stock is issued—and the five-year (or new shorter-tier) holding period starts ticking from that date. The sooner you act, the sooner you can lock in your eligibility and begin building toward a tax-free exit.
Let’s Talk About Your Business
As an attorney who helps business owners structure for both growth and tax efficiency, I see the Big Beautiful Bill as a golden opportunity. But it’s not one-size-fits-all—conversion to a C corporation can have other tax and operational consequences that must be carefully weighed.
If you’re considering:
…then now is the time to have a conversation about whether QSBS planning makes sense for you.
This article was co-written by Peak Law, LLC and Sager CPAs & Advisors.
Peak Law, LLC
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