What is an accredited investor? Definition, how it works and examples
The SEC definition that decides who may buy into a private company — the income, net-worth and professional tests, and how each is evidenced.
The short answer
The accredited investor meaning is set by US securities law: a person or entity that meets one of the tests in SEC Rule 501(a) — income above $200,000 ($300,000 jointly), net worth above $1 million excluding the home, a Series 7, 65 or 82 licence, or an entity test — and may therefore buy private offerings. It matters because almost every private company raises money under an exemption that is limited to this group. If you want to buy into a company before it lists — directly, through a fund or through a single-deal vehicle — the first question is not the price.
What is the accredited investor definition under SEC Rule 501(a)?
The accredited investor defined in Rule 501(a) of Regulation D is a status, not a licence or an exam. The SEC keeps no register of accredited investors and issues no certificate. The rule lists thirteen categories; a person or entity that fits any one of them at the time of the sale is accredited for that sale. The individual thresholds have not been indexed to inflation, and the last broad change came on 26 August 2020, when the SEC added the professional and knowledge-based routes.
How does the accredited investor test work in practice?
The income test reads a track record: two past years over the line on one basis — individual or joint, not a mix — and no reason to expect this year to fall short. The net worth test reads a snapshot on the day of the sale, and the home is where most people misjudge it. The example below shows why. The same person might still qualify another way. With income of $210,000 and $230,000 in the last two years and a similar salary this year, they pass the income test and the net worth figure no longer matters.
How the accredited investor exemption works: Rule 506(b) and 506(c)
Selling shares to the public in the US requires registering them with the SEC. Private placements skip that step under Rule 506 of Regulation D, and the accredited investor test is what makes the shortcut defensible: the rule assumes people above the line can bear the risk of an investment without a prospectus. Rule 506 comes in two forms, and they differ in how hard the issuer has to look at you. Rule 506(b) No general solicitation or advertising. Up to 35 non-accredited but sophisticated purchasers in any 90-day period, though many private-company deals take none.
Accredited investor opportunities: what the status opens in private markets
Most venture rounds, secondary sales of private-company shares, private funds and single-deal vehicles are sold under Rule 506, so accreditation is the entry ticket to all of them. In the pre-IPO market that usually means buying a share of an SPV that holds the company’s stock — the vehicle sells its own interests under the exemption, and each buyer generally has to pass the test.
Accredited investor insights: the mistakes that cost people a deal
Counting the home Home equity never counts towards the $1 million, however large it is. Neither does cash raised by borrowing against the home in the 60 days before the sale. One good year The income test needs two past years over the line and a reasonable expectation for the current one. A first year above $200,000 is not enough yet. Mixing bases Using individual income one year and joint income the next does not work; pick one basis for all three years. A lapsed licence Series 7, 65 and 82 qualify only while held in good standing. Passing the exam years ago is not the test.
The terms this page uses
Regulation D The set of SEC rules that lets a company sell securities without registering them. Rule 501 defines the terms, Rule 506 sets the conditions most private rounds rely on. Rule 506(b) The private-placement route without advertising. The issuer needs a reasonable belief that buyers are accredited; most deals take accredited investors only. Rule 506(c) The route that allows advertising, in exchange for selling only to accredited investors whose status the issuer has taken reasonable steps to verify. Spousal equivalent A cohabitant in a relationship generally equivalent to marriage.
Questions about accredited investor status
What does accredited investor mean in one sentence? A person or entity that meets one of the tests in SEC Rule 501(a), and may therefore buy securities sold privately under Regulation D. The tests are income, net worth, a professional licence or an entity threshold. Meeting any one is enough. Who qualifies as an accredited investor in 2026?
What does accredited investor mean in one sentence?
A person or entity that meets one of the tests in SEC Rule 501(a), and may therefore buy securities sold privately under Regulation D. The tests are income, net worth, a professional licence or an entity threshold. Meeting any one is enough.
Who qualifies as an accredited investor in 2026?
The same people as at any point since the 2020 amendments: individuals with more than $200,000 of income ($300,000 jointly) in each of the last two years, more than $1 million of net worth excluding the home, or a Series 7, 65 or 82 licence; and entities with more than $5 million in assets or investments. The figures are not indexed to inflation, and proposals to change them have not been adopted.
Is there an accredited investor exam?
Not as such. The SEC recognises the Series 7, 65 and 82 licences held in good standing, so passing one of those FINRA-administered exams and keeping the licence active qualifies you. There is no separate accreditation exam or knowledge test.
Does the IRS decide who is an accredited investor?
No. The accredited investor definition is SEC law, not tax law. IRS forms such as the W-2, 1099, K-1 or Form 1040 are simply the usual evidence for the income test.
How do I become an accredited investor in the USA?
You do not apply anywhere and there is no register to join. You meet one of the tests and show it to the issuer or platform selling the offering, usually with a recent document. What that looks like on Axevil is set out in the Help Center’s accredited investor requirements.
Where every rule on this page comes from
Every threshold was checked against the primary source on 1 October 2026. Rules change; the version in force is always the one published in the Code of Federal Regulations. For the platform side — documents, the in-app check and timings — see accredited investor requirements and the SEC’s own summary.