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New Tax Bill Puts a Stop to Incentives for Startup Investing

September 21, 2021

Via: JD Supra

An overlooked provision of the new, sweeping tax bill currently under consideration by Congress as part of President Joe Biden’s $3.5 trillion infrastructure plan would substantially limit the qualified small business stock (QSBS) capital gain exclusion for certain taxpayers.

If passed, such a move would curtail the incentives for arguably risky investing in early stage companies, funding that usually comes from founders, their friends and families, angel investors and, eventually, venture capital funds. The potential loss of up to half the current QSBS tax incentive would likely cast a considerable pall on entrepreneurs and their investors interested in starting new businesses but unable to access needed capital.

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