Short answer
This calculator splits a business sale price into rollover, holdback, fees, and cash, then applies 2026 federal rates: 20 percent on the capital gain portion, 37 percent on the ordinary portion (non-compete, consulting, receivables, equipment recapture), 3.8 percent net investment income tax unless you materially participated, and your state's rate. If you enter a QSBS-excluded amount, it removes that gain from the federal capital gains tax while still applying state tax, because states like California do not conform. It is a planning estimate, not a tax return, and it does not project what your rollover equity will be worth.
Key facts
- Federal rate on goodwill
- 20% long-term capital gain, plus 3.8% net investment income tax unless you materially participated.
- Federal rate on ordinary items
- 37% (non-compete, consulting or transition pay, receivables, depreciation recapture).
- QSBS
- Enter your excluded amount to see the federal tax it removes. State tax still applies where the state does not conform (for example California).
- State rates used
- California 13.3%, New York 10.9%, New York City 14.776%, Texas and Florida 0%, plus 5% and 7% options.
- Rollover
- Removed from the taxable amount at closing and shown as deferred tax at 20% plus 3.8% plus your state rate, assuming low basis.
What this calculator does and does not do
It does one job: it shows how the words in the allocation, the size of the rollover, and any QSBS exclusion change your cash. It applies the 2026 top federal rates because a sale of this size places almost every seller in the top capital gains band and the top ordinary bracket. It treats the holdback as taxable when paid and shows your position with and without it. It applies your state's top rate to the full taxable amount, which is a fair estimate for a sale above a million dollars.
It does not model the brackets below the top, the alternative minimum tax, the special 28 percent rate that applies to the taxable slice of QSBS in the three and four year tiers, the phase-down of the state tax deduction, a pass-through entity tax election, the timing of installment payments, imputed interest, the Section 453A interest charge, Section 1374 built-in gains tax on a young S corporation, or a C corporation's second layer of tax on a straight asset sale. Each of those can move the number by five or six figures, each has its own page on this site, and each needs your CPA. It also does not project what the rollover equity will be worth; the deferred tax line assumes it is worth exactly its deal value, which is the optimistic case.
How to use it well
Enter the buyer's draft
Type in the split the letter of intent proposes. If the letter says nothing about how the price is allocated, treat that silence as a gap to close before you sign, not a detail to sort out later.
Then enter what you would ask for
Shift the non-compete and consulting figures down and let goodwill absorb them, and watch the federal line drop. At 2026 rates each $100,000 you reclassify is worth roughly $17,000 less federal tax, before state and payroll tax pile on.
Test QSBS only if your CPA confirmed it
Enter the excluded amount to see the federal tax it removes, and note that the state line stays because states like California do not conform. Leave it at zero if you are not sure you qualify.
Change the rollover and the state
A higher rollover lowers today's tax and raises the amount riding on the second sale. A different state can change the bill by a seven-figure amount. Read rollover equity and how a sale is taxed before deciding either is fixed.
When the calculator is not enough
If your share is above a few million dollars, if you are a C corporation, if QSBS is in play, if your S election is young, if the deal includes an earnout or seller note, or if you are moving states, the calculator gets you within sight of the number but not to it. That is where a coordinated review by your CPA, your transaction attorney, and a planner who has modeled the household side earns its cost. The case study shows what that looked like for one owner, and the contact page explains how a review works.
Questions people ask
How do I use the QSBS field?
Only if your business was a C corporation in a qualifying field and you have confirmed eligibility with a CPA. Enter the amount of gain your CPA expects to be excluded (up to the greater of $15 million or ten times your basis at the full five-year mark). The calculator removes the federal capital gains tax on that amount but keeps state tax, because California and some other states do not follow QSBS. If you are not sure you qualify, leave it at zero. See the QSBS page.
Why does the calculator still charge state tax on the QSBS amount?
Because QSBS is a federal exclusion, not a state one. California does not conform at all, so a California seller owes up to 13.3 percent state tax on gain that pays zero federal tax. If your state does conform, the state line overstates your tax and you can pick a lower state rate to approximate it.
Why does the calculator tax the whole rollover later at about 23.8 percent plus state?
Because your basis carries over, and most owners who built a business have a low basis, so nearly all of the rollover is gain when it is finally sold. By then you are usually a passive owner, so the 3.8 percent net investment income tax applies. The estimate assumes the rollover is worth exactly its deal value, which is the optimistic case; it can be worth less, or nothing.
Why are the goodwill and ordinary allocations separate inputs?
Because that split is the single largest thing you can influence. The purchase price allocation on Form 8594 decides whether a dollar is taxed at 20 percent or 37 percent. Enter what the term sheet proposes, then enter what you would ask for, and compare.
Does it handle an earnout or seller note?
Not separately. Treat an earnout like a holdback for a rough view. Earnouts and notes bring their own rules, including imputed interest and the Section 453A interest charge above $5 million of installment obligations. See earnouts and installment sales.
Why will it not project my rollover value?
Because any number would be a guess dressed up as math, and an investment advisor should not put a projected private equity outcome in a calculator. Plan your household as if the rollover were worth zero and treat anything above that as a good surprise.