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Tax Relief for Small Business Investors: Faster Capital Gains Exclusion

This law aims to encourage investment in small businesses by significantly changing the rules for excluding capital gains from federal income tax. Investors can qualify for tax relief sooner, as the minimum stock holding period is reduced from five to three years. Furthermore, after holding the stock for five years or more, the capital gain can be 100% excluded from tax, maximizing financial benefits.
Key points
Reduces the minimum holding period for Qualified Small Business Stock (QSBS) tax exclusion from 5 years to 3 years.
Introduces a phased capital gains exclusion: 50% after 3 years, 75% after 4 years, and 100% after 5 years.
Allows the holding period of convertible debt instruments (bonds) to count towards the required stock holding period.
Removes the requirement that the small business must be a C corporation to qualify for the tax exclusion.
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Expired
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Additional Information
Print number: 118_S_1243
Sponsor: Sen. Cornyn, John [R-TX]
Process start date: 2023-04-20
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Summarized by: gemini-2.5-flash-preview-09-2025
Source data: api.congress.gov
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OFFICIAL LEGAL TITLE

Small Business Investment Act of 2023

FREQUENTLY ASKED QUESTIONS

What is the official ID of this bill?

The official print number for this legislation is 118_S_1243.

Which chamber initiated this legislation?

This legislation was initiated in the Senate.

When did the legislative process begin?

The process officially started on 2023-04-20.

What are the main provisions?

Key points include:

  • Reduces the minimum holding period for Qualified Small Business Stock (QSBS) tax exclusion from 5 years to 3 years.
  • Introduces a phased capital gains exclusion: 50% after 3 years, 75% after 4 years, and 100% after 5 years.
  • Allows the holding period of convertible debt instruments (bonds) to count towards the required stock holding period.
  • Removes the requirement that the small business must be a C corporation to qualify for the tax exclusion.
What is the specific legal status?

The current status is Expired.

Where can I read the full text of this legislation?

The full official text is available at: View full text

Who is the primary sponsor?

The primary sponsor is Sen. Cornyn, John [R-TX].

What is the latest detailed status?

The latest detailed status is: Introduced in Senate

Is this summary verified?

Yes. This content was analyzed by AI and verified by the Lustra Judge System on 2025-12-26.

CATEGORIES

Taxes Economy