Financial Management
Changes to Qualified Small Business Stock In OBBBA Budget Unlock New Opportunities
By PHILLIP ROSS, CPA, CGMA, PARTNER
As tax legislation continues to evolve, opportunities for entrepreneurs, investors and small businesses often emerge—but only for those paying close attention. One such opportunity revolves around Qualified Small Business Stock (QSBS), a powerful tax tool designed to spur investment in startups and small businesses, which allows eligible taxpayers to exclude up to 100% of taxable capital gains on the sale of qualifying stock. This tax tool could be extremely beneficial to construction company owners.
With the passage of the “One Big Beautiful Bill Act” (OBBBA) on July 4, significant changes to QSBS will reshape how construction company owners plan for future gains and exits. Under the OBBBA, new revisions expand the benefit of QSBS, providing additional opportunities to utilize and perhaps increase the exclusion of capital gains.
As a reminder, before the passage of the new legislation, to qualify for the QSBS exclusion the following basic qualifications had to be met:
- Stock must be originally issued by a domestic C-corporation. The stock may not be acquired through the secondary market.
- Gross assets must not exceed a value of $50,000,000 at any time immediately before or after the issuance of the stock.
- At least 80% of the business’ assets must be used in the conduct of a qualifying business.
- There cannot be significant redemptions of stock by the issuing corporation.
- The shareholder must have held the stock for more than five years at the time of sale.
- QSBS exclusion is only available to shareholders that are not corporations.
The below chart highlights the key changes that have been passed as part of the OBBBA. It is important to note that the changes enacted by the recent legislation are effective for stock issuances after July 4, 2025 (the “Effective Date”). For stock issued before the Effective Date, the pre-OBBBA rules are still in effect as outlined below.
The above changes have strategic implications for construction businesses promoting greater flexibility in exits, increased investment in startups, and overall cash savings. While navigating QSBS is complex, it is important for maximizing tax advantages, especially with the new expanded rules.
About the author: Phillip Ross, CPA, CGMA is an Accounting and Audit Partner and Chair of the Construction Industry Group at Anchin, Block & Anchin, LLP. For more construction industry thought leadership and content, log on to www.anchin.com.
Published: September 15, 2025.