As Tax Season Heats Up, Three Provisions Every Founder Should Know: 83(b), 1202, and 409A (plus, Wisconsin’s QNBV)

With tax season approaching, there are three tax provisions every startup founder should have on their radar: 83(b), 1202 (QSBS), 409A—and, if you’re building in Wisconsin—QNBV.

• 83(b) Election:
  If you receive equity that vests over time, filing an 83(b) election within 30 days of the grant can be pivotal. The election allows you to recognize income based on the grant‑date value and starts the clock for both long‑term capital gains and QSBS eligibility. Miss the 30‑day window, and the consequences can be severe. As your company’s value increases, the cost of missing the election only compounds!
• Section 1202 (QSBS):
  Section 1202 remains one of the most powerful tax tools in venture. With the passage of the One Big Beautiful Bill there are several significant updates to Qualified Small Business Stock. Eligible holders can now qualify for an exclusion of up to the greater of $15 million or 10× basis, with a new tiered holding period that allows partial exclusions beginning in year three. QSBS eligibility is highly technical—with the analysis turning on precise details depending on the specifics of the stock issuances, holding periods, and company asset thresholds—but it can meaningfully shape a startup’s exit opportunities.
• 409A Valuations:
  For startups, cash is scarce; equity is not. To grant tax‑advantaged stock options, companies need a defensible fair market value. A 409A valuation provides a safe harbor for pricing options at FMV and is a critical compliance step as you begin issuing equity compensation. If you fail to properly document these grants, significant penalties and taxes may apply.
• QNBV (Wisconsin):
  Wisconsin’s Qualified New Business Venture (QNBV) program can materially enhance the economics of your funding opportunity by offering investors a 25% state income tax credit on qualifying cash equity investments. Lawmakers are currently considering updates that would increase the per‑company cap and modernize other requirements—keep an eye on developments from WEDC and the Legislature.

This is general information, not specific legal or tax advice.