The lifetime gift tax exemption: what QSBS founders need to know

By Abboud Chaballout

When you gift QSBS shares to trusts as part of a stacking strategy, each transfer counts against your lifetime gift tax exemption. Understanding how this exemption works — and how to preserve it — is essential to making stacking economically practical.

The Numbers

The lifetime exemption was permanently increased from $13.99M to $15M under the One Big Beautiful Bill Act (OBBBA), effective January 1, 2026. It will be indexed for inflation starting in 2027. Unlike the prior increase under the 2017 Tax Cuts and Jobs Act, this one does not sunset.

Read about all OBBBA changes to QSBS →

How It Works

You can give up to $19,000 per recipient per year without any tax implications — no reporting, no exemption used. Gifts above $19,000 to any single recipient are reported on IRS Form 709 and reduce your lifetime exemption. You only owe gift tax once the lifetime exemption is fully exhausted — and the rate is 40%.

For married couples, you can effectively double the annual exclusion to $38,000 per recipient through gift-splitting (requires filing Form 709).

Why This Matters for QSBS Stacking

When you gift shares to a non-grantor trust, the IRS values the gift at fair market value — determined by an independent appraisal, not your 409A or your investors' post-money valuation. Every dollar of share value gifted reduces your $15M lifetime exemption.

This is why timing matters. The earlier you gift, the less exemption you use. California founders should gift early to maximize both state tax savings and exemption preservation.

Example: A founder who owns 20% of their company gifts 10% of their personal holdings to a non-grantor trust.

An independent gift tax appraisal may reduce these amounts through applicable discounts for lack of marketability and minority interest.

Learn which valuation to use when gifting QSBS shares →