What you keep: net proceeds after tax from selling a business, by state
Federal, 3.8% NIIT and state tax on your sale, and what you keep. 2026 law, every number dated and sourced.
By Hans Goldstein, Enrolled Agent, admitted to practice before the IRS · Rates checked
On a $3,000,000 business sale with zero basis, a single seller keeps $2,331,512 in Texas and $1,962,327 in California. The gap is $369,185, all of it state tax. Federal income tax ($562,088) and the 3.8% net investment income tax ($106,400) are the same in both states. Computed October 18, 2026 on 2026 law.
Enter your own sale below. The result splits federal tax, the 3.8% NIIT and state tax, shows what you keep, and can compare getting paid over several years against one lump sum.
Worked example: a $3,000,000 sale
Single filer, no other income, zero basis, asset sale of an operating business, all long-term capital gain, 2026 federal standard deduction of $16,100.
| Line | Texas | California |
|---|---|---|
| Federal income tax (0%/15%/20% bands) | $562,088 | $562,088 |
| 3.8% NIIT on gain over $200,000 | $106,400 | $106,400 |
| State tax | $0 | $369,185 |
| You keep | $2,331,512 | $1,962,327 |
Getting paid over five years can net more. The same $3,000,000 received as five yearly payments of $600,000 keeps each year's gain in lower brackets: a Texas seller keeps $182,050 more, a California seller $272,899 more (interest on the note ignored). If $400,000 of a $3,000,000 California sale is depreciation recapture, taxed as ordinary income, the seller keeps $1,946,461.
How the calculator works
- Gain = price minus basis plus depreciation taken. For an asset sale, depreciation taken is recaptured as ordinary income and the allocation preset treats a share of the price (inventory, receivables, non-compete) as ordinary income. A stock or entity sale is all capital gain.
- Federal income tax uses the 2026 ordinary brackets, standard deduction and 0%/15%/20% capital gain bands for single and married filing jointly (IRS Rev. Proc. 2025-32, checked October 18, 2026). Unrecaptured section 1250 gain is taxed here as ordinary income, which can overstate tax on real property recapture.
- NIIT is 3.8% of the lesser of the gain or modified AGI over $200,000 (single) or $250,000 (joint), IRC 1411. Tick "materially participate" to remove it for an active owner.
- State tax uses the Exit Tax Map's 2026 rules for 50 states and DC, each tied to its state source: see the Exit Tax Map methodology and sources. State schedules are the single-filer schedules, so for a married couple in a graduated-rate state the state figure is an estimate that errs high. Other income is treated as ordinary income under the same state schedule.
- Several years splits the capital gain evenly across the payment years. Recapture and ordinary-asset gain are recognized in year one, as the installment rules require. Brackets and other income are held constant, and interest on the note is ignored.
Not modeled: local taxes, AMT, state residency changes, QSBS, section 1202, charitable planning, transaction costs, purchase price allocation disputes. Rates and thresholds change; this page is dated October 18, 2026 and is refreshed when the IRS publishes 2027 figures.
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Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS. He is not a CPA or attorney. Education only, not tax or legal advice for your situation.