This accounts for the fact that taxes are owed on gains. If selling at a loss, taxes don't apply and the formula simplifies.
Understanding the Inputs
What each parameter means for break-even calculation
Average Cost/Share
Your cost basis per share, including any buy commissions.
Shares
Number of shares you plan to sell.
Sell Commission
Transaction costs when selling—brokerage fees, SEC fees.
Tax Rate on Gain
Your expected capital gains tax rate (15%, 20%, etc.).
The Definitive Guide to Break-Even Analysis: Precise Exit Planning
Stop guessing. Calculate the exact price you need to exit a trade without losing a penny—covering all costs, commissions, and taxes. A must-have tool for disciplined traders.
In trading, the "break-even price" is the specific price at which your net profit is exactly zero. It's the line in the sand where your trade recovers your initial capital and all associated expenses. Selling one cent below this price results in a realized loss; selling one cent above results in a realized gain.
Why It's Not Just Your Buy Price
Many novice investors believe if they buy a stock at $50, their break-even is $50. This is incorrect. You must account for the friction of the market: transaction fees, commissions, spreads, and taxes. Real break-even is always higher than your entry price for long positions (and lower for short positions).
The Hidden Costs of Trading
To calculate a true break-even, you must stack all costs on top of your purchase price:
Buy Commissions: Added to your initial cost basis.
Sell Commissions: Deducted from your final proceeds.
Regulatory Fees: Small SEC fees (in the US) applied to sell orders.
Slippage: The difference between the quoted price and your actual execution price. In fast markets, you might click "Sell" at $50.00 but get filled at $49.95.
The Tax Impact on Break-Even
This is where it gets tricky. If you sell for a profit (price > cost), you owe taxes. That tax bill is a cash outflow.
Short-Term vs. Long-Term Rates
Use your expected rate. Short-term gains (held <1 year) are taxed at ordinary income rates (up to 37%). Long-term gains are taxed at 0%, 15%, or 20% depending on income.
The "Tax Gross-Up"
If you need to cover a fixed cost (like a commission) using trading profits, you actually need to earn more than the cost amount because the government takes a cut of that profit. This calculator automatically performs that "gross-up" calculation.
Note: If you are selling at a loss, taxes generally don't apply (and you may get a tax benefit), simplifying the math to just covering commissions.
Break-Even Strategies
The "Scratch" Trade
Active traders often use a "scratch" trade strategy. If a trade isn't working immediately but hasn't hit the stop loss, they advise exiting at break-even to free up capital while preserving the mental state (no loss taken).
Partial Break-Even
If you own 100 shares and sell 50 at a profit, your break-even on the remaining 50 shares drops significantly (or can even become negative!), meaning you can hold the rest "risk-free" in terms of your original capital outlay.
The Psychology of "The Scratch"
Why is calculating break-even so important? Because preserving capital is the #1 rule of trading. Exiting a stalled trade at break-even feels like a waste of time, but it is a victory. It means you lived to fight another day with your capital intact.
Knowing your exact break-even point allows you to set your "Limit Sell" order precisely where it needs to be to just walk away clean.
Frequently Asked Questions
Detailed answers about break-even pricing
Is break-even before or after tax?
This calculator gives you a post-tax break-even price. It accounts for potential taxes on gains. It answers the question: "What price do I need to sell at so that the money landing in my bank account—after paying the broker and the IRS—equals exactly what I started with?"
What if I sell at a loss?
If the price falls below your cost basis, capital gains taxes disappear (you don't pay tax on losses). In this scenario, the break-even calculation simplifies to just: (Cost Basis + Sell Commission) / Shares. Taxes only "drag" your break-even higher when you are in profit territory trying to cover costs.
Do dividends lower my break-even price?
Yes, in a "Total Return" sense. If you received $1.00 in dividends, you have already recovered $1.00 of your capital. You can technically sell the stock for $1.00 less than your purchase price and still break even overall. This calculator focuses on price break-even, but you can mentally subtract dividends from the result.
What tax rate should I use?
If holding less than 1 year, use your ordinary income tax bracket (e.g., 22%, 32%). If holding more than 1 year, use the long-term capital gains rate (typically 15% or 20% for most investors).
Does currency exchange affect break-even?
Yes, significantly. If you trade foreign stocks, a fluctuation in the exchange rate can turn a stock profit into a realized loss (or vice versa). You would need to add an "FX buffer" to your break-even calculation to be safe.
How do options strategies affect break-even?
Selling covered calls against your stock generates premium income. This premium effectively lowers your cost basis, and thus lowers your break-even price. If you bought at $50 and sold a $2 call, your new break-even is $48.
Does slippage matter?
Yes. In fast-moving markets, you may not get filled at the price you see on screen. It is wise to add a small buffer (e.g., consider your break-even to be 5-10 cents higher than calculated) to account for bid-ask spread costs.
How do stock splits affect break-even?
Splits adjust shares and price inversely. Recalculate your input "Average Cost per Share" after the split (divide cost by split ratio), and the calculator will give you the correct new post-split break-even price.
Does this apply to short selling?
Yes, but the math is inverted. For short selling, your break-even is typically below your entry price because you must cover the cost of borrowing the shares (short interest) and dividends valid while you are short.
What about "Wash Sales"?
If your current position is a result of a Wash Sale (you bought it back after selling at a loss within 30 days), your Cost Basis is artificially higher because the disallowed loss was added to it. You must use this adjusted cost basis to calculate your true break-even.
Summary
The Break-even Stock Sale Price Calculator determines the exact price you need to sell at to cover your cost basis, commissions, and taxes on gains.
• If selling above cost: you need a higher price to cover taxes on the gain.
It accounts for the fact that taxes only apply to positive gains, providing an accurate post-tax break-even price.
Use this to set realistic sell targets and understand the true cost of your position.
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Determine the sale price per share to break even after commissions and taxes on gains.
How to use Break-even Stock Sale Price Calculator
Step-by-step guide to using the Break-even Stock Sale Price Calculator:
Enter your values. Input the required values in the calculator form
Calculate. The calculator will automatically compute and display your results
Review results. Review the calculated results and any additional information provided
Frequently asked questions
How do I use the Break-even Stock Sale Price Calculator?
Simply enter your values in the input fields and the calculator will automatically compute the results. The Break-even Stock Sale Price Calculator is designed to be user-friendly and provide instant calculations.
Is the Break-even Stock Sale Price Calculator free to use?
Yes, the Break-even Stock Sale Price Calculator is completely free to use. No registration or payment is required.
Can I use this calculator on mobile devices?
Yes, the Break-even Stock Sale Price Calculator is fully responsive and works perfectly on mobile phones, tablets, and desktop computers.
Are the results from Break-even Stock Sale Price Calculator accurate?
Yes, our calculators use standard formulas and are regularly tested for accuracy. However, results should be used for informational purposes and not as a substitute for professional advice.