Expanded Tax Break in GOP Law Has Startups Talking Restructuring

Entrepreneurs are mulling restructuring to take advantage of a GOP tax law provision that made a capital gains break long favored among Silicon Valley startups more lucrative.

The Section 1202 qualified small business stock gain exclusion allows founders and early investors to avoid capital gains taxes on sales of certain stock. The 2025 Republican tax-and-spending law allows taxpayers to reap some of that benefit if the stock is held for at least three years, instead of more than five.

The new law also allows for larger businesses to qualify—those with $75 million or less in gross assets, up from $50 ...