Small Business Investment Act of 2025

The Small Business Investment Act of 2025 modifies tax rules to make gains from selling qualified small business stock (QSBS) more favorable for investors. It shortens the required holding period from five years to three years, with a phased exclusion: 50% of gains excluded after three years, 75% after four, and 100% after five years or more. The bill also allows investors to count the time they held convertible debt instruments toward the holding period for the stock they convert into, and removes the prior requirement that businesses must be C corporations, expanding the exclusion to include S corporations. These changes directly affect small business investors by altering the tax benefits available when selling qualifying stock.