Startup Sale Tax Calculator

See how the duration you hold your startup equity impacts your tax bill when you sell.

Enter Your Sale Details

Estimated Results

Total Profit (Gain): $1,000,000
Holding Category: Long-Term (> 5 Years, QSBS Eligible)
Applicable Tax Rate: 0%
Estimated Tax Owed: $0
Net Profit (After Tax): $1,000,000

How It Works

The duration you own an asset—your holding period—is the key to determining how it's taxed.

What are Capital Gains?

A capital gain is the profit you make from selling an asset for more than you paid for it. For startups, this asset is typically your equity or stock. The U.S. tax system treats these gains differently depending on how long you held the asset before selling.

Short-Term vs. Long-Term

This is the most critical distinction for tax purposes. The dividing line is exactly one year.

  • Short-Term Capital Gains: If you hold the stock for one year or less, your profit is taxed at your ordinary income tax rate. This is the same rate applied to your salary, and it's the highest tax rate you can pay on investments.
  • Long-Term Capital Gains: If you hold the stock for more than one year, your profit is taxed at lower, preferential rates. These rates are typically 0%, 15%, or 20%, depending on your total income. This is a significant tax advantage.

The Power of QSBS (Section 1202)

Qualified Small Business Stock (QSBS) is a major tax incentive from the IRS to encourage investment in small, growing businesses. If your stock meets the criteria and you hold it for more than five years, you can potentially exclude up to 100% of your capital gains from federal taxes, up to $10 million or 10x your cost basis.

Key Requirements:

  • The company must be a U.S. C-Corporation.
  • Its gross assets must have been $50 million or less at all times before and immediately after the stock was issued.
  • You must have acquired the stock directly from the company (not on a secondary market).
  • The company must be in a qualified trade or business (most tech startups qualify).

Visualizing the Impact

This chart compares the tax owed on your profit under three scenarios, based on your inputs above. Notice how the tax bill drops dramatically with longer holding periods.