2026 IRS brackets built in

Tax on Sale of a Business: Business Sale Tax Calculator for Capital Gains Tax and Net Proceeds After Fees

Enter the sale price, your tax basis and your other income, and this business sale tax calculator estimates the tax on the sale of a business the way the return will actually compute it: recaptured depreciation first at ordinary rates, then the long-term gain stacked on top at 0%, 15% or 20%, then state tax, then what lands in your account after the success fee.

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Business sale tax calculator 2026 IRS brackets

Sale price

Where you sell (success fee)

Legal and other selling costs

Your tax basis in what you sell

Gain taxed as ordinary income (recapture)

Other taxable income this year

Filing status

State tax rate on the gain

Add the 3.8% net investment income tax (passive owners, investors who did not work in the business)

Taxable gain

Total tax

Effective rate

You keep

Federal capital gains tax:

Tax on recapture:

Net investment income tax:

State tax:

Success fee:

Amount realized:

After tax you keep more than with a 10% broker on the same sale.

Educational estimate on 2026 federal rates · not tax advice · confirm with your CPA

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The short answer to how much tax you pay on the sale of a business: most US owners who sell a business they held for more than a year pay a federal long-term capital gains rate of 15% or 20% on most of the gain, ordinary rates of up to 37% on any depreciation recapture, possibly the 3.8% net investment income tax, plus state tax. On a $2,000,000 sale by a married couple in a 5% state, that works out to about $437,000, or roughly 24% of the gain, on the defaults in the calculator.

The 2026 thresholds used here are the IRS figures from Rev. Proc. 2025-32: long-term gains are taxed at 0% up to $98,900 of taxable income for a joint return and $49,450 for a single filer, at 15% up to $613,700 joint and $545,500 single, and at 20% above that. Because the gain is stacked on top of your other income, a large sale pushes most of the gain into the 20% band.

This is an educational estimate, not tax advice. Entity type, the purchase price allocation, state residency and the timing of payments all change the answer, so confirm the numbers with a CPA before you sign a letter of intent.

The fee you pay to sell is deductible, so it costs less after tax than it looks. But it still costs real money: at $1,000,000 the gap between a 4% and a 10% success fee is $60,000 before tax and about $45,000 after it, on the defaults in the calculator.

How each piece of the sale is taxed

The federal rules the calculator applies, and the ones it leaves to your CPA

Dollar thresholds are the 2026 amounts published by the IRS. Rules the calculator does not model are listed so you know what to ask about.

Swipe to see every column →

Piece of the sale	2026 federal treatment	Source
Long-term capital gain (held over a year)	0% up to $98,900 of taxable income (joint) or $49,450 (single); 15% up to $613,700 (joint) or $545,500 (single); 20% above	Rev. Proc. 2025-32, section 3.03
Head of household and married filing separately	0% to $66,200 and 15% to $579,600 (head of household); 0% to $49,450 and 15% to $306,850 (separate)	Rev. Proc. 2025-32, section 3.03
Depreciation recapture on equipment and software (section 1245)	Ordinary income rates of 10% to 37%, stacked on top of your other income	IRC section 1245; rate tables in Rev. Proc. 2025-32
Unrecaptured section 1250 gain on real estate	Taxed at a maximum of 25%; the calculator treats it as ordinary, which overstates it slightly	IRC section 1(h)
Net investment income tax	3.8% on the lesser of the gain or modified AGI above $250,000 (joint), $200,000 (single) or $125,000 (separate); thresholds are not indexed	IRC section 1411
Active owner selling a non-passive business	Gain from a trade or business you materially participate in is generally outside the 3.8% tax, so the box starts unticked	IRC section 1411(c)(2) and (c)(4)
Success fee, legal and other selling costs	Reduce the amount realized, so they come off the gain before any tax is computed	IRC section 1001
Asset sale by a C corporation	Taxed twice: 21% at the corporation, then again when the proceeds are distributed. Not modeled; see the 338(h)(10) and QSBS pages	IRC sections 11 and 331
C corporation stock held over 3, 4 or 5 years	Section 1202 can exclude 50%, 75% or 100% of the gain, capped at $15,000,000 for stock issued after 4 July 2025. Not modeled	IRC section 1202
Seller note or earnout paid over years	An installment sale spreads the capital gain over the years you are paid, but recapture is taxed in the year of sale. Not modeled	IRC section 453; Form 6252

IRS Rev. Proc. 2025-32 read firsthand from irs.gov in September 2026. Statutes read from law.cornell.edu. This table is a summary, not tax advice.

2026 IRS brackets, our arithmetic

Tax on the sale of a business at five sale prices, and what the fee costs after tax

Each row: married filing jointly, $180,000 of other taxable income, $50,000 tax basis, $20,000 of recapture, $40,000 of legal and other costs, a 5% state rate, no net investment income tax. The two right-hand columns compare a 4% success fee with a 10% one.

Swipe to see every column →

Sale price	Federal tax	State tax at 5%	You keep, 4% fee	You keep, 10% fee
$500,000	$59,900	$19,500	$360,600	$336,600
$1,000,000	$153,715	$43,500	$722,785	$677,785
$2,000,000	$345,715	$91,500	$1,442,785	$1,352,785
$5,000,000	$921,715	$235,500	$3,602,785	$3,377,785
$10,000,000	$1,881,715	$475,500	$7,202,785	$6,752,785

Our arithmetic on the 2026 IRS rate tables, computed at the 4% fee. Tax is a little lower at the 10% fee because the larger fee shrinks the gain. Not tax advice and not a forecast.

Side by side

This calculator vs a generic capital gains calculator

A fair look at what each does well. Both are useful. Here is where they differ.

Feature	Buyouts	A generic capital gains calculator
Selling costs	Takes the success fee and legal costs off the amount realized before tax	Taxes the whole sale price
Depreciation recapture	Taxes it at ordinary rates first, then stacks the capital gain on top	Treats every dollar as capital gain
Rate bands	Stacks the gain on your other income across the 0%, 15% and 20% bands	Applies one flat rate
3.8% surtax	Optional, with the section 1411 thresholds, off by default for active owners	Often always on, or missing
Fee comparison	Shows what you keep after tax versus a 10% broker	Not offered
Filing status	All four 2026 statuses from Rev. Proc. 2025-32	Often single and joint only
What neither does	Model a C corporation asset sale, QSBS or an installment sale	The same

Comparison reflects general, publicly understood positioning. Capabilities change, so check each marketplace for the latest. Trademarks belong to their owners.

Why founders and buyers pick Buyouts

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The allocation decides the rate

In an asset sale the buyer and seller agree how the price splits across equipment, software, customer contracts, a non-compete and goodwill on Form 8594. Money assigned to depreciated equipment comes back as recapture at ordinary rates. Money assigned to goodwill is capital gain. The same price can carry very different tax depending on that split, so negotiate the allocation, not just the number.

The fee you pay is part of the math

A 10% broker fee on a $2,000,000 sale is $200,000. Listing on Buyouts costs a monthly plan of $79, $249 or $699 while you are listed plus a 5%, 4% or 3% success fee at close, and buyers pay no success fee. After tax, the gap between 4% and 10% on that sale is about $90,000 on the calculator defaults.

Verified numbers hold the price

Buyers cut the price when the revenue does not reconcile in diligence, and a lower price is a smaller gain but a much smaller check. Every SaaS listing on Buyouts carries MRR, ARR, churn and margin checked against the source systems, so the number you plan your taxes around is the number that closes.

Keep reading on the parts of a deal this page touches: spreading the gain with an installment sale and Form 6252, the section 1202 QSBS exclusion for C corporation stock, how the purchase price allocation decides what is recapture, the 338(h)(10) election when a buyer wants an asset sale, the F reorganization before an S corporation sale, every fee in selling a SaaS business, business broker fees compared, band by band.

Good questions

Tax on the sale of a business, answered

Most US owners pay a federal long-term capital gains rate of 15% or 20% on the bulk of the gain, ordinary rates of up to 37% on depreciation recapture, sometimes the 3.8% net investment income tax, and state tax. On a $2,000,000 sale by a married couple with $180,000 of other income in a 5% state, the total is about $437,000.

Start with the amount realized: the price minus the success fee and selling costs. Subtract your tax basis to get the gain. The part that is depreciation recapture is taxed at ordinary rates, and the rest is stacked on top of your other taxable income and taxed at 0%, 15% or 20% depending on where it lands against the 2026 IRS thresholds.

Both, usually. Goodwill and stock held for more than a year produce long-term capital gain. Depreciation you previously deducted on equipment and software is recaptured as ordinary income, inventory and receivables are ordinary income, and payments for a consulting agreement or a non-compete are ordinary income to the seller.

For 2026 the long-term rate is 0% on taxable income up to $98,900 for a joint return or $49,450 for a single filer, 15% up to $613,700 joint or $545,500 single, and 20% above that, per IRS Rev. Proc. 2025-32. A large sale usually pushes most of the gain into the 20% band.

It depends on whether you worked in it. Under section 1411, gain from a trade or business in which you materially participate is generally excluded, so an active founder selling an S corporation or LLC interest often avoids it. A passive investor pays 3.8% on the lesser of the gain or modified AGI above $250,000 joint or $200,000 single.

Yes. Success fees, broker commissions and legal fees paid to sell reduce the amount realized, so they come straight off the gain. That is why a 10% fee costs you less than 10% after tax. It still costs real money: on a $1,000,000 sale, moving from a 10% fee to 4% leaves about $45,000 more in your pocket after tax.

It is the part of the gain equal to depreciation or section 179 expensing you already deducted on equipment, computers or capitalized software. Section 1245 taxes that portion as ordinary income at up to 37%, and in an installment sale it is all taxed in the year of sale even if you are paid later. Enter it in the recapture box.

The legitimate levers are structure and timing: hold for more than a year, negotiate an allocation weighted to goodwill, take a seller note as an installment sale to spread the gain, qualify C corporation stock for the section 1202 exclusion, and plan the year of sale around your other income. Each needs a CPA before the letter of intent, not after.

Sellers usually prefer a stock sale because the whole gain is capital gain and a C corporation avoids the second layer of tax. Buyers usually prefer an asset sale because they get a stepped-up basis to depreciate. For S corporations a 338(h)(10) election or an F reorganization can give the buyer asset treatment while keeping most of the seller's capital gain.

In most states, yes, usually at ordinary income rates. California taxes capital gains as ordinary income at up to 13.3%. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming have no personal income tax. Washington has a separate 7% capital gains tax with higher tiered rates on the largest gains and a deduction for a qualified family-owned small business.

For stock or an LLC interest it is what you paid or contributed, adjusted up for income passed through to you and down for distributions and losses. For assets it is cost minus depreciation taken. A founder who started the company with little cash often has a basis close to zero, which makes almost the entire price taxable gain.

On the calculator defaults, a married couple with $180,000 of other income in a 5% state keeps about $722,800 of a $1,000,000 sale after a 4% success fee, $40,000 of legal costs and about $197,200 of tax. With a 10% broker fee the same seller keeps about $677,800.

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