Qualified Opportunity Fund Exit Tax Planner

Forecast the two federal tax bills associated with a Qualified Opportunity Fund by combining the deferred gain, projected appreciation through exit, and the capital gains rate you expect to face. The planner highlights the 2026 recognition payment, the exit-year liability on appreciation, and the annual or monthly reserve you should set aside from now until the recognition deadline.

Total capital gain originally deferred into the qualified opportunity fund.
Projected percentage increase in the fund investment between funding and your exit year.
Calendar year you expect to dispose of the QOF investment after meeting the required holding period.
Combined federal long-term capital gains and NIIT rate tied to your filing status.
Optional — defaults to the current tax year when blank so you can pace savings toward the 2026 bill.
Optional — defaults to 0%. Enter 10% or 15% if you qualified for historical holding-period step-ups.

This tool provides illustrative federal tax projections. Consult a qualified tax advisor for personalized planning and compliance guidance.

Examples

  • Example 1 — $500,000 deferred gain, 35% appreciation, exit year 2027, 23.8% federal rate ⇒ 2026 federal tax due: $119,000.00 | Exit-year tax on appreciation (2027): $41,650.00 | Reserve 2 years: $59,500.00/yr ($4,958.33/mo) to cover 2026 bill | Total projected federal taxes: $160,650.00
  • Example 2 — $250,000 deferred gain, 20% appreciation, exit year 2031, 20% federal rate, 10% step-up ⇒ 2026 federal tax due: $45,000.00 | Exit-year tax on appreciation (2031): $10,000.00 | Reserve 2 years: $22,500.00/yr ($1,875.00/mo) to cover 2026 bill | Total projected federal taxes: $55,000.00

FAQ

How do I estimate my effective capital gains rate?

Combine your expected long-term capital gains bracket with the 3.8% net investment income tax, if applicable, to capture the full federal percentage for 2026 and the exit year.

What if my exit is after the 10-year holding period?

If you expect to hold the QOF stake for ten years or longer, appreciation may step up to fair market value and eliminate the exit-year tax. Set the expected appreciation to zero or input your anticipated exclusion percentage.

Can state taxes be layered into this plan?

Yes. Add your estimated state capital gains percentage to the federal rate input, or run a second scenario that isolates state exposure so you can stack the reserves.

How should I treat quarterly estimated payments?

If you intend to prepay the 2026 tax bill with estimates, divide the annual reserve output by four and add the installments to your Form 1040-ES payment schedule.

Does the step-up input account for both 10% and 15% adjustments?

Yes. Enter 10% or 15% depending on your holding period milestones. The calculator caps the cumulative step-up at 90% so a minimum 10% of the deferred gain remains recognized.

Additional Information

  • Recognized gain in 2026 equals the deferred capital gain reduced by any eligible 10% or 15% basis step-up earned before January 1, 2022.
  • Exit-year tax applies your long-term capital gains rate to appreciation modeled on the original deferred amount.
  • Reserve timing divides the 2026 bill by the remaining years before recognition, helping you pace quarterly estimates or sinking funds.
  • Monthly reserve guidance splits the annual reserve into twelve equal transfers for automated budgeting.
  • Total projected federal taxes combine the 2026 recognition payment with the exit-year appreciation tax so you see the full exposure.

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