Selling A Business In Ventura County: What The Tax Bill Looks Like In 2026

The Short AnswerA Ventura County owner who sells a business owes federal long-term capital gains tax of up to 20%, may owe the 3.8% net investment income tax depending on how involved the owner was, and owes California tax at ordinary rates up to 12.3%, plus 1% above $1 million. Deal structure and timing can affect the rest.

What Federal Tax Applies When A Ventura County Owner Sells?

A business sale can produce long-term capital gain, ordinary income and other treatment, depending on the assets sold and how the price is allocated. For the part that is long-term capital gain, the IRS puts the top rate this way: “a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.”

For 2026, Revenue Procedure 2025-32 sets that 15% ceiling at $613,700 of taxable income for a married couple filing jointly. For a married couple filing jointly, the rate depends on where the gain falls within taxable income: the 0% rate reaches $98,900 of taxable income, and the 20% rate applies above $613,700. How much of a sale closing in Thousand Oaks, Camarillo or Oxnard reaches the 20% band depends on taxable income, filing status and the character of the gain.

Does The 3.8% Net Investment Income Tax Apply To A Business Sale?

It depends on the type of transaction, the income or assets involved, the owner’s participation and other facts, which makes it the most fact-driven line on the bill. The tax applies at 3.8% to net investment income once modified adjusted gross income passes a threshold, $250,000 for a married couple filing jointly.

What counts as investment income turns on participation. The IRS lists “gains from the sale of interests in partnerships and S corporations (to the extent the partner or shareholder was a passive owner)” among the gains taken into account. It lists “operating income from a nonpassive business” among the income that is not net investment income. An owner who ran the company every day and an owner who held a stake passively can reach different answers on the same sale price.

The IRS page describes the principle. How it applies to a particular sale, including how much of the gain is treated as passive, is a question for your CPA.

How Does California Tax The Same Gain?

California taxes it as ordinary income. The Franchise Tax Board says: “California does not have a lower rate for capital gains. All capital gains are taxed as ordinary income.”

The 2025 California rate schedule, the latest published, reaches 12.3% on taxable income above $1,485,906 for a married couple filing jointly. On top of that comes the Behavioral Health Services Tax. The FTB instructions say: “If your taxable income is more than $1,000,000, compute the Behavioral Health Services Tax.” The rate is 1% of the amount over $1,000,000.

With no lower rate for the gain, California is the second-largest line in the example further down, behind the federal capital gains tax.

Does Deal Structure Change The Bill?

Yes. Publication 544 explains that “the sale of a business is usually not a sale of one asset. Instead, all the assets of the business are sold,” and that “each asset is treated as being sold separately for determining the treatment of gain or loss.” Each asset class can carry its own tax result.

One result matters early. The same publication says that when you dispose of depreciable property at a gain, “you may have to recognize all or part of the gain as ordinary income under the depreciation recapture rules.” Ordinary income is taxed at ordinary rates rather than the capital gains rates above. How the purchase price is allocated across equipment, real property, goodwill and inventory can change the total, and the IRS notes that a buyer and seller often have adverse interests in that allocation.

Whether the deal is a sale of assets or a sale of stock or ownership interests, and how the price is divided, are questions for the attorney and CPA before a letter of intent is signed.

What Does A $5,000,000 Gain Cost In One Year Versus Five?

Spreading receipt of the price can change which brackets the gain falls in. The IRS defines the mechanism: “An installment sale is a sale of property where you’ll receive at least one payment after the tax year in which the sale occurs.” Under it, “you include in income each year only the part of the gain you receive or are considered to have received.”

The example below uses a married couple in Ventura County with a $5,000,000 long-term gain and no other income. It runs the same gain two ways through the tax engine behind this site’s calculators.

The gap comes from the brackets. Each of the five years gets its own 15% federal band and stays under California’s $1,000,000 surcharge line. The single large year uses the 15% band once and pays the surcharge on the amount above the line.

What The Example Leaves Out

It is an illustration and not a projection for anyone. It leaves out depreciation recapture, which Topic No. 705 says belongs in the year of the sale: “You must report any portion of the gain from the sale of depreciable assets that’s ordinary income under the depreciation recapture rules in the year of the sale.” It leaves out interest on the buyer’s note: “You must also include in income any interest as ordinary income.” Installment payments depend on a buyer who keeps paying. Not every asset qualifies either. The IRS says “you can’t use the installment method to report gain from the sale of inventory or stocks and securities traded on an established securities market.”

CalculatorSee what a large income year does to your total tax bill→

Why Might A Ventura County Sale Involve Two Tax Questions?

The sale is the first. The second is the retirement plans the business sponsors, and Ventura County has a number of them.

We read the 2024 Department of Labor filings for small defined benefit plans, cash balance plans included: 25 or fewer participants and a target normal cost (the actuary’s measure of the cost of benefits earned in the year) of at least $100,000. Counting businesses in Ventura County cities, 115 of these plans turn up. Thousand Oaks has 36, Ventura 21, Camarillo 17, Oxnard 16 and Simi Valley 10. Healthcare practices run 38 of the 115 and professional services firms run 28. The median business reports $2,402,250 across the employer’s plans. These counts are a floor, because Westlake Village addresses are excluded: the city sits in Los Angeles County.

A sale may also call for a review of each retirement plan the business sponsors. The options depend on the deal and the plan documents. All or some qualified-plan pension or annuity payments may be taxable, except qualified designated Roth distributions. We call the bill that may arrive later the Second Bill, and the small-business pension tax study shows how the exit route changes it. For a Ventura County business with a seven-figure plan total, the plans may become a second tax question in the sale year.

Which Questions Can Affect The Bill?

Structure, allocation, participation, timing and the retirement plans can all affect the size of the bill, and this list is not exhaustive. Each depends on facts that only your own documents show, which is the reason to raise them before a letter of intent rather than after. This article is general education. Your CPA and attorney advise on the actual transaction.

About The Author

Tyler Ostrovsky founded 19th Hole Financial after eight years as a professional golfer, including status on PGA Tour Canada. He builds tax strategy and advanced life insurance plans for high earners and works alongside their CPAs and attorneys.