Phased increase in exclusion for gain from qualified small business stock

(a) In general Section 1202(a)(1) of the Internal Revenue Code of 1986 is amended— (1) by striking 50 percent and inserting the applicable percentage, and (2) by striking held for more than 5 years and inserting held for at least 3 years. (b) Applicable percentage Section 1202(a) of such Code is amended by adding at the end the following new paragraph: (5) Applicable percentage Except as provided in paragraphs (3) and (4), the applicable percentage under paragraph (1) shall be determined under the following table: Years stock held: Applicable percentage: 3 years 50% 4 years 75% 5 years or more 100%. (c) Continued treatment as not item of tax preference (1) In general Section 57(a)(7) of such Code is amended by striking An amount and inserting In the case of stock acquired on or before the date of the enactment of the Creating Small Business Jobs Act of 2010, an amount. (2) Conforming amendment Section 1202(a)(4) of such Code is amended— (A) by striking, and at the end of subparagraph (B) and inserting a period, and (B) by striking subparagraph (C). (d) Other conforming amendments (1) Section 1202(a)(4) of such Code is amended by inserting and before the date of the enactment of the Small Business Investment Act of 2025 after Act of 2010. (2) Paragraphs (3) and (4) of section 1202(a) of such Code are each amended by inserting held for more than 5 years and after In the case of qualified small business stock. (3) Section 1202(a)(3)(A) of such Code is amended to read as follows: (A) the applicable percentage under paragraph (1) shall be 75 percent, and, (4) Section 1202(a)(4)(A) of such Code is amended to read as follows: (A) the applicable percentage under paragraph (1) shall be 100 percent, and. (5) Section 1202(b)(2) of such Code is amended by striking more than 5 years and inserting at least 3 years. (6) Section 1202(g)(2)(A) of such Code is amended by striking more than 5 years and inserting at least 3 years. (7) Section 1202(j)(1)(A) of such Code is amended by striking more than 5 years and inserting at least 3 years. (e) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to stock acquired after the date of the enactment of this Act. (2) Continued treatment as not item of tax preference The amendment made by subsection (c) shall take effect as if included in the enactment of section 2011 the Creating Small Business Jobs Act of 2010.