Enter your business financials and intended sale structure. We'll apply the right industry multiple (SaaS, e-commerce, Pro Services, manufacturing, or restaurants), model the after-tax proceeds under asset-sale, stock-sale, or Qualified Opportunity Zone reinvestment, and show you the gap (or surplus) against your retirement number.
If you sell your business for $X, you can generate $Y/year in retirement income using a 4% safe withdrawal rate. To compute the after-tax value of your business and the retirement income it produces: (1) take the gross sale price (industry multiple × annual revenue or EBITDA), (2) apply the tax treatment for your deal structure — asset sale bills goodwill as ordinary income at up to 37% federal (plus 25% depreciation recapture and 3.8% NIIT, ~40% combined effective), while a stock sale treats the entire gain as long-term capital gains at 20% federal + 3.8% NIIT + 5-7% state (~30% effective); (3) reinvesting proceeds in a Qualified Opportunity Zone fund (IRC §1400Z-2) defers the federal capital gains tax until at least 2026 and, with a 10-year hold, excludes the appreciation entirely. Required nest egg under the 4% rule is desired annual income × 25; gap analysis compares after-tax proceeds to that number. Sources: IRS Publication 544 (Sales of Business Property), BizBuySell Q1 2026 Insight Report, and SBA.gov — Exit Your Business.
Annual EBITDA — net profit before interest, taxes, depreciation, amortization
Multiples vary by industry: SaaS commands the highest; restaurants the lowest
Bengen's 4% rule: spend 4% of nest egg in year 1, then adjust for inflation
Asset sales are the IRS default structure for most small businesses
More runway for growth typically supports a higher multiple
Estimated Business Value (low / mid / high)
—
at chosen multiple
Gross Sale Price (mid)
—
applied industry multiple
After-Tax Proceeds
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based on sale structure
Required Nest Egg (4% rule)
—
target income × 25
Gap / Surplus
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vs. required nest egg
Effective Tax Rate
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federal + state + NIIT
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| Strategy | Est. Annual Income | Risk Level |
|---|---|---|
| Commercial SPIA | — | Low |
| Dividend Stock Portfolio | — | Medium |
| Treasury Bond Ladder | — | Low-Medium |
* Income estimates are illustrative. SPIA rates as of 2026; consult a financial advisor for personalized projections.
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Most small businesses sell for a multiple of either annual revenue or earnings before interest, taxes, depreciation, and amortization (EBITDA). The comparable transaction method — the approach M&A advisors use — looks at recent sales of similar businesses and applies the median multiple to your financial figure. The multiple an acquirer pays depends on perceived risk, growth rate, recurring revenue, asset base, customer concentration, and owner dependency. Industry matters: SaaS businesses with predictable recurring revenue and high gross margins command the highest multiples; restaurants with thin margins and high rent dependency command the lowest.
Two databases drive the industry-multiple benchmarks used in this calculator: BizBuySell's quarterly Insight Report and the International Business Brokers Association (IBBA) Market Pulse. Both report medians by industry for businesses under $5M in transaction value. A formal certified business appraisal costs $3,000-$10,000 and is required for SBA-financed deals above $250,000; an informal broker opinion of value is free and sufficient for early planning.
| Industry | EBITDA Multiple Range | Revenue Multiple Range |
|---|---|---|
| SaaS | 10–15× EBITDA | 3–5× ARR |
| E-commerce | 5–10× EBITDA | 1–3× revenue |
| Professional Services | 3–5× EBITDA | 0.5–1.5× revenue |
| Manufacturing | 4–7× EBITDA | 0.3–0.8× revenue |
| Restaurants | 2–4× EBITDA | 0.2–0.5× revenue |
Multiples are mid-2026 ranges from BizBuySell Q1 2026 Insight Report and IBBA Market Pulse Q1 2026; actual deals vary based on growth rate, customer concentration, and owner involvement.
The 4% rule is the most widely cited baseline for retirement planning. William Bengen's 1994 research established that a 4% initial withdrawal rate — adjusted annually for inflation — has survived every 30-year retirement period in U.S. market history since 1926. The math is straightforward: required nest egg equals desired annual income divided by 0.04 (or, equivalently, desired annual income multiplied by 25).
To generate $120,000/year in retirement, you need $3M in liquid capital. To generate $80,000/year, $2M. To generate $60,000/year supplemented by Social Security and a pension, $1.5M. The 4% rule assumes a balanced 60/40 portfolio (60% equities, 40% bonds) and treats fees and taxes separately. The IRS does not endorse a specific withdrawal rate; for a 35+ year retirement in a low-return environment, some planners now suggest 3.3-3.7% as a more conservative rate. The calculator below uses 4% as its baseline.
Most pre-retirees benefit from blending two income sources: a guaranteed income floor from a Single Premium Immediate Annuity (SPIA) covering essential expenses, plus a drawdown portfolio covering discretionary spending. The strategy comparison table in your results card shows three common conversions and the annual income they each produce from your after-tax proceeds.
How your deal is structured can swing your after-tax proceeds by $100,000-$300,000 on a $1.5M sale. The structure matters more than most sellers realize. Below are the three most common paths and their tax treatment under current federal law (see IRS Publication 544 for the full rules).
An asset sale — the IRS default for sole proprietorships, LLCs taxed as partnerships, and many S-corps — treats each asset sold individually. Buyer purchases equipment, customer lists, inventory, intellectual property, and goodwill separately. Sellers pay ordinary income tax on the gain above cost basis for each asset class. Goodwill recapture can reach the 37% top federal bracket. Depreciated assets trigger depreciation recapture taxed at up to 25%. Combined with 3.8% Net Investment Income Tax and state tax, the effective rate is often near 40%. Buyers prefer asset sales for the stepped-up cost basis. On a $1.5M gross sale, an asset seller might net $900K after taxes and fees.
A stock sale — available only for C-corps and properly elected S-corps — packages the entire gain into a single long-term capital gain. Federal rate is 20%, plus 3.8% NIIT (for taxpayers above the $200K/$250K single/joint threshold), plus 5-7% state tax. Effective federal rate ~30% — much more favorable than asset-sale treatment if your business has significant appreciated goodwill. Sellers prefer stock sales for the lower tax; buyers often resist because they cannot step up the asset basis the way they can in an asset purchase. On a $1.5M gross sale, a C-corp stock seller might net $1.05M after taxes and fees — roughly $150K more than the asset-sale path.
If your deal is a stock sale, you can defer the entire federal capital gains tax by reinvesting proceeds into a Qualified Opportunity Zone (QOZ) fund within 180 days of closing. Under IRC §1400Z-2, the deferred gain is reduced by 10% if held 5+ years and 15% if held 7+ years. After a 10-year hold, the basis steps up to fair market value and any further appreciation is permanently excluded from federal tax. This strategy works best when a qualifying QOZ fund exists in your target reinvestment geography. Source: IRS Topic 420 — Opportunity Zones.
Once proceeds land in your account, the conversion strategy determines how long the capital lasts and how much income it generates. Most pre-retirees benefit from a guaranteed income floor (covering non-negotiable expenses) paired with a discretionary drawdown portfolio (covering lifestyle spending). Below are the three most common conversions modeled in this calculator.
A SPIA converts a lump sum into guaranteed monthly income for life. For a 62-year-old in 2026, current commercial SPIA payout rates are approximately 5.5-6.5% of premium — materially higher than a stock-sale dividend portfolio or a Treasury bond ladder. Income is fully taxable as ordinary income. The tradeoff: the principal is gone. For many business sellers, the optimal allocation is 30-40% of proceeds to a SPIA generating an income floor, with the remaining 60-70% invested for growth and discretionary spending. See RetireStack's Annuity Calculator for SPIA rate comparisons from 60+ carriers.
A diversified dividend portfolio (low-cost ETFs like SCHD, DGRO, or VYM) yields approximately 3-4% in 2026, with capital appreciation potential. The dividend yield is below SPIA payout rates, but the principal remains intact and inherits to your estate. Suitable for discretionary spending, not essential expenses. Sequence-of-returns risk applies.
A ladder of U.S. Treasury bonds maturing in sequential years yields ~4-4.5% in 2026 with virtually no default risk. Provides predictable principal return for the first decade of retirement, freeing you from forced selling in down equity markets. Interest is fully taxable as ordinary income but exempt from state and local tax if held in TreasuryDirect.gov accounts. Excellent for retirees who want certainty but are unwilling to give up principal via SPIA.
Start with the gross sale estimate (industry multiple × annual revenue or EBITDA), then subtract taxes and fees. Under an asset sale, the IRS treats most components as ordinary income — up to 37% on goodwill, plus 25% depreciation recapture and 3.8% Net Investment Income Tax — a combined effective rate near 40%. Under a stock sale (S-corp or C-corp), the entire gain is taxed at the 20% federal long-term capital gains rate plus 3.8% NIIT and state income tax (5-7%), for an effective rate of ~30%. Of a $1.2M gross sale, you typically net $720K (asset sale) to $840K (stock sale) per IRS Publication 544 (Sales of Business Property).
William Bengen's 1994 research established that a 4% initial withdrawal rate — adjusted annually for inflation — has survived every 30-year retirement period tested in U.S. market data since 1926. To produce $80,000/year in retirement income, you need $2M in liquid capital ($80,000 ÷ 0.04 = $2,000,000). The IRS does not endorse a specific withdrawal rate, but the 4% rule is the most widely cited conservative benchmark for retirement planning per IRS Publication 590-B (Distributions from Individual Retirement Arrangements).
In an asset sale (the default for most small businesses), the buyer purchases individual assets — equipment, customer lists, goodwill, inventory — and the seller pays ordinary income tax on the recaptured portion and capital gains on appreciated assets. In a stock sale (used for C-corps and some S-corps), the buyer purchases the entity itself, and the seller pays long-term capital gains on the entire gain — currently 20% federal + 3.8% NIIT + state tax. Buyers prefer asset sales (higher basis step-up); sellers prefer stock sales (lower tax). The structure alone can mean a $100,000-$300,000 difference on a $1.5M deal. Source: IRS Publication 544 (Sales of Business Property).
Under IRC §1400Z-2, capital gains reinvested into a Qualified Opportunity Fund within 180 days of sale are deferred until December 31, 2026 — or sooner if the QOZ investment is sold. After a 5-year hold, the deferred gain is reduced by 10%; after a 7-year hold, by 15%. After a 10-year hold, the basis steps up to fair market value and the appreciation on the QOZ investment is permanently excluded from federal tax. QOZ reinvestment preserves capital for retirement but only if a qualifying fund exists in your target geography. Source: IRS Topic 420 (Opportunity Zones).
If your after-tax proceeds fall short of your target nest egg (desired annual income × 25), four levers reduce the gap: (1) defer sale via installment sale under IRC §453 to spread the tax across years; (2) reinvest capital gains in a Qualified Opportunity Zone fund (IRC §1400Z-2) to defer tax up to 6 years and exclude appreciation after 10 years; (3) allocate 30-40% of proceeds to a Single Premium Immediate Annuity (SPIA) at ~5.5-6.5% payout to generate guaranteed lifetime income that reduces the required capital base; (4) lower your target income by 10-20%, delay retirement 2-3 years, or take part-time consulting income post-exit. Most business owners combine at least two levers. Source: IRS Publication 544 and SBA.gov — Exit Your Business.