QSBS State Tax Treatment

District of Columbia Qualified Small Business Stock and Investor Tax Incentives

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The District of Columbia has historically followed the section 1202 100% tax exclusion on capital gains from the sale of QSBS. However, in late 2025 / early 2026 DC sought to decouple from the Federal OBBBA legislation, which would make QSBS gains subject to DC tax. The US Congress, in response, formally disapproved of the DC law – see this article from ArentFox Schiff for further details.

D.C. Code Ann. § 47-1817.07

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

About QSBS Expert

QSBS Expert was founded by a group of entrepreneurs, investors, accountants and lawyers who came together when trying to navigate a QSBS situation of their own. We quickly realized that the regulations left a lot of open questions and the publicly available information was confusing to sift through…so we thought that others may also benefit from having a “go to” resource for all things QSBS.