Not tax advice. This is a simplified planning estimate. Bring the numbers to a CPA before you agree an allocation in the LOI.
After-tax proceeds calculator
Rough federal + state tax and net cash from a sale price, by deal structure and price allocation. Uses 2026 federal capital gains thresholds (IRS Rev. Proc. 2025-32).
Not tax advice - a simplified planning estimate. Assumes goodwill has no tax basis, treats all equipment gain as ordinary recapture, ignores the 0% bracket, AMT, state-specific rules, installment-sale deferral and payroll tax on consulting. Confirm with a CPA before you negotiate allocation. Federal thresholds: IRS Rev. Proc. 2025-32; state rates: Tax Foundation.
2026 federal rates the calculator uses
| Item | 2026 rule | Source |
|---|---|---|
| Long-term capital gains | 0% / 15% / 20%; 20% starts above $613,700 (MFJ) or $545,500 (single) of taxable income | |
| Net investment income tax | 3.8% above $250,000 MAGI (MFJ) / $200,000 (single); thresholds are not indexed. Gains from a business you materially participate in are generally excluded. | |
| Unrecaptured Sec. 1250 gain (real estate) | Taxed at a maximum 25% | |
| Equipment depreciation recapture (Sec. 1245) | Taxed as ordinary income | |
| Price allocation | Buyer and seller report the allocation across asset classes I-VII on Form 8594 | |
| Seller notes | Installment method can spread gain over payments, but recapture is taxed in the year of sale |
Three levers that change your tax
- Asset vs stock sale. Buyers prefer asset deals (they get a stepped-up basis); sellers usually prefer stock deals (mostly capital gain). C corporations selling assets face tax at the company and again on distribution. See asset sale vs stock sale.
- Allocation. Dollars assigned to goodwill are usually capital gain; dollars assigned to fully depreciated equipment, a non-compete or a consulting agreement are ordinary income. The buyer wants the opposite, so allocation is a negotiation.
- Timing. A seller note can spread gain across years under the installment method; an earn-out may too. See seller financing and earn-outs.
Frequently asked questions
How much tax will I pay when I sell my business?
It depends on structure, allocation and your state. For a pass-through owner selling mostly goodwill, federal tax is usually 15-20% on the gain, plus state tax (0% in Florida and Texas, up to 13.3% in California), plus ordinary rates on equipment recapture and any non-compete payments.
Does the 3.8% NIIT apply to selling my business?
Usually not if you materially participate in the business, per IRS guidance on net investment income. Passive owners generally owe it above the $200,000 / $250,000 thresholds.
Can I avoid capital gains tax entirely?
Rarely for trade businesses. Section 1202 (QSBS) applies only to qualifying C corporation stock and excludes many service fields, including health and accounting. See the Section 1202 guide.
Sources
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) (accessed 2026-09-23)
- IRS Topic 559 - Net investment income tax (accessed 2026-09-23)
- IRS Topic 409 - Capital gains and losses (accessed 2026-09-23)
- IRS - About Form 8594, Asset Acquisition Statement (accessed 2026-09-23)
- IRS Publication 537 - Installment sales (accessed 2026-09-23)
- Tax Foundation - State individual income tax rates and brackets (updated Apr 2026) (accessed 2026-09-23)