Does California follow federal QSBS and Section 1045 rules?
No. California doesn’t conform to the federal QSBS exclusion or the Section 1045 rollover, so California residents generally owe state tax on the gain when they sell, even if they roll the proceeds for federal purposes.
What it means in practice
A rollover can still defer federal tax, which is usually the larger amount. Budget for the state tax due at sale.
Other states
A few other states also don’t fully follow the federal rules, and conformity changes. Check your state of residence, and the state you lived in when you sold, with your advisor.
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General information, not tax advice. Last reviewed November 2026.