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The majority of states do allow the QSBS tax exclusion on a state income tax level, but there are some nuances between them. Generally, the three ways that states treat the QSBS tax exclusion are (i) the state has no income tax or capital gains tax, (ii) the state income tax is based on federal adjusted gross income (AGI), which means the exclusion is built-in to income taxable on the state return, and (iii) the state income tax is based on federal income. If the state income tax is based on federal income than there is either a state level QSBS tax exclusion with possible nuances between state and federal treatment or there is no QSBS tax exclusion allowed.
Below is how each state treats the QSBS tax exclusion.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.