NJ Follows Federal QSBS Guidelines - A Huge Win for Founders
New Jersey made a big move that will benefit in-state founders and investors in a major way. As of June 30, 2025, the state has aligned with federal tax rules under Section 1202, which allows for the exclusion of gains from Qualified Small Business Stock. Starting in 2026, New Jersey taxpayers who meet the requirements can exclude these gains from both federal and state income tax.
This change comes at the same time as expanded QSBS benefits under the federal One Big Beautiful Bill Act. The updated rules shorten the required holding period, increase the gain exclusion cap, and expand the types of companies that qualify. Together, these federal and state changes significantly boost the after-tax potential for founders, early employees, and investors.
For New Jersey residents, QSBS rollovers just became especially powerful. Previously, even if gains were excluded at the federal level, New Jersey still taxed them, even at rates that could exceed 10%. Now, taxpayers who sell QSBS and reinvest the proceeds into new qualifying stock through a rollover under Section 1045 can defer and eventually eliminate those gains entirely.
With the right planning, it’s now possible to avoid both federal and state capital gains taxes altogether.
This opens the door for smarter planning all around. Founders can lean into equity-based compensation with more confidence. Investors can take advantage of earlier exits and reinvestment opportunities without losing out on tax benefits. For anyone building or backing high-growth businesses in New Jersey, this is a rare opportunity to compound gains without giving up a chunk to taxes.
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You could benefit from a QSBS rollover if:
You recently sold QSBS before the 5 year minimum hold period
You recently sold QSBS that you held for 5 years, but your gain exceeds $10M
You’re considering an exit in the next 1-4 years and want to think ahead about tax planning
Are an angel investor seeking flexible QSBS opportunities to help defer gains
The Vint Retail Partnership Program can be a solution for QSBS gain holders in need of a flexible, low-risk, and relatively liquid QSBS opportunity. Get in touch with our team today to learn how to partner with us and potentially save millions in gains tax from a stock sale.
Here are some of the questions we typically ask when having a first meeting with potential partners:
Did you recently sell or are you holding Qualified Small Business Stock?
When did you sell your stock?
Was this your first liquidity event?
Are you a founder, early employee, outside investor/angel, etc?
Are you certain that your stock met the Active Trade/Business and other requirements under Section 1202? (Outside of holding period requirements)
What is your intended rollover amount?
How long did you hold your initial stock?
(Read more about QSBS planning and see some example situations)
