US Venture Data Supports NY QSBS Opportunity Still Rising
In a venture market marked by recalibration, one thing remains clear: New York is roaring back.
According to the Q1 2025 PitchBook-NVCA Venture Monitor, New York saw a significant uptick in venture capital dollars this quarter, second only to the Bay Area. Despite a broader drop in deal count nationwide, total capital invested in New York increased, reaffirming its status as a premier hub for innovation and startup growth.
Beyond the headlines about rising capital flows lies a less publicized, but potentially more lucrative, opportunity for New York founders: Qualified Small Business Stock.
Most founders are aware of QSBS at the federal level, which can exclude up to 100% of capital gains from federal taxes on eligible stock sales. However, what many don’t realize is that New York is one of a few high-tax states that also conforms to the federal QSBS exclusion at the state level.
That’s a big deal. In most high-tax states like California or New Jersey, founders still owe state taxes on liquidity events, even when they qualify for federal QSBS exemptions. In contrast, qualifying founders in New York who sell stock in their startups could potentially pay zero capital gains taxes both federally and at the state level. This translates to savings of 30% to 35% or more in combined taxes.
To illustrate, consider a founder who exits a New York-based C-Corp and realizes a $10M gain. If their shares qualify under Section 1202 of the IRS Code and New York’s state tax rules, they could avoid paying the 20% federal capital gains tax, the 3.8% net investment income tax, and New York’s 10.9% top income tax rate. Altogether, that’s a potential tax savings of over $3.5M.
With venture dollars flowing back into New York and exits on the horizon for early-stage companies that weathered the past few years, now is the time for founders and early employees to get serious about QSBS eligibility. The requirements are specific: companies must be C-Corps, gross assets must be under $50M at the time of stock issuance, and shareholders must hold stock for at least five years. But for those who qualify, the benefit can be life-changing.
New York is not just back on the fundraising map. It has always been on the QSBS map, and most founders haven’t noticed. For entrepreneurs preparing for a funding round, a secondary sale, or a major liquidity event, understanding and planning for QSBS could be one of the smartest moves they make.
The funding momentum is encouraging, but the opportunity to keep more of what you earn is even more powerful. In New York, a bit of tax planning could mean millions more in your pocket when your moment finally arrives.
______________________________________
You can work with us and 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)
