President Trump’s One Big Beautiful Bill (OBBB) includes a new business tax provision that could affect how entrepreneurs organize their startups. The change is making C corporations more appealing than they’ve been in years. For founders, early employees, and investors, the update to the Qualified Small Business Stock (QSBS) exemption is a big deal. It raises the potential tax-free gains from company stock and gives startup owners more control over when and how to realize those gains. Here’s what’s changing and why it matters.

A Bigger Tax Break for Startup Entrepreneurs and Investors

The OBBB expands the QSBS capital gains tax exclusion from $10 million to $15 million for stock acquired after July 4, 2025. So, if you own qualifying stock in a C corporation and then sell it after meeting the holding period and other requirements (e.g. your C corp must be U.S.-based and have less than $75 million in total assets when it issues the stock), you could exclude up to $15 million in gains from federal income tax.

Simply put: if the company is successful, you get to keep more of your profit.

This is a significant advantage for founders and early employees who hold stock in their own startups, especially when emerging industries like AI and biotech are driving company values to rise quickly.

Why This Matters for New Businesses

The QSBS change gives small startups another reason to consider that route instead of an LLC or S corp. With the higher exemption, founders of C corporations can protect more of their future profits from taxes when they eventually sell their stock. Investors get the same tax break if they keep their shares for at least five years.

It’s also a boost for early employees who receive equity as part of their compensation. Depending on how much the company appreciates, their potential payout for company growth could be partly or fully tax-free.

More Flexibility

The OBBB also gives business owners more control over when they pay taxes on their gains. Instead of selling all your shares at once, you can sell some shares now and hold the rest for later. The timing can help you manage income level, avoid higher tax brackets, and plan for future rate changes.

The new $15 million cap also makes it easier for founders to include their business stock in long-term wealth and estate plans. They can transfer QSBS shares to trusts or family members while keeping the tax break. So, they can pass on more of the company’s value without losing money to taxes.

For new entrepreneurs, especially in tech and AI sectors, this change could mean keeping millions more in long-term wealth. Before deciding how to structure your business, talk with a tax professional who can help you navigate the ever-changing federal tax code.