Asset Sale – Long-Term Capital Gains Taxes (2025)

The large majority of insurance agency and brokerage M&A transactions are structured as an asset purchase as opposed to a stock purchase. In general, most of the profit you receive from the sale of your insurance agency is considered a capital gain and is subject to long-term capital gains tax. The rates vary, 0%, 15%, and 20% depending on your taxable income, which are much more favorable than ordinary tax rates, (see below, rates table). Also, most sales will be subject to the Net Investment Income Tax (NIIT) of 3.8%. This tax would apply to individuals whose modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). The NIIT went into effect in 2013 to help fund health care reform and is often referred to as “the Obamacare Tax”. In addition, possibly any state capital gains taxes that you would be subject to.

Please Note: This content is for general informational purposes only and should not be considered legal or tax advice. For guidance tailored to your specific situation, please consult a qualified tax advisor for specific tax implications of selling your insurance agency or brokerage.

Capital Gain: The profit you make from the sale is the difference between the sale price and your cost basis (original investment plus improvements.)

Short-Term Capital Gains: Assets that are held for a year or less are subject to short term capital gains tax, which is taxed at your ordinary income tax rate.