Commissions, Taxes and Your Break-even Price
Selling at exactly your average cost does not always get your money back. Commissions on the way in and out, small regulatory fees, and in some markets a transaction tax all come out of the proceeds. This guide covers the break-even math and the US tax rules that matter most when you add to a losing position. It is general information, not tax advice.
Trading costs in the US
- Commissions. Most major US online brokers charge $0 for US-listed stocks and ETFs. Many brokers outside the US charge a percentage instead, often around 0.25% per trade for US shares. The calculator's US preset uses 0.25% each way; set both to 0 if you pay no commission.
- Regulatory fees on sales. An SEC fee (under Section 31) and a FINRA trading activity fee are charged on sales. Both are very small for typical trades.
- No transaction tax. The US has no stamp duty or securities transaction tax on stock trades. Some other markets do, for example South Korea charges 0.20% on sales; that is what the “sell tax” field is for.
The break-even formula
Break-even price = total cost × (1 + buy commission) ÷ (shares × (1 − sell commission − sell tax))The top is what you actually paid, fees included. The bottom adjusts for the slice of each sale that goes to fees. Selling at this price returns exactly what you put in.
Example
You buy 10 shares at $100 with a 0.25% commission. You pay $1,000 + $2.50 = $1,002.50. When you sell, 0.25% of the proceeds goes to commission, so you keep 99.75%. Break-even is $1,002.50 ÷ (10 × 0.9975) ≈ $100.50, about 0.50% above the price you paid.
| Commission each way | Average cost | Break-even price |
|---|---|---|
| $0 | $100.00 | $100.00 |
| 0.25% | $100.00 | ≈ $100.50 |
For the averaging-down example in the formula guide (40 shares at $120 plus 40 at $90), the average is $105.00 and the break-even with 0.25% each way is about $105.53. With $0 commissions the two numbers are the same.
US capital gains tax
- Short-term vs long-term. Gains on shares held one year or less are taxed at ordinary income rates. Shares held more than a year qualify for long-term rates of 0%, 15% or 20% depending on taxable income. Higher earners may also owe the 3.8% net investment income tax, and state tax can apply.
- Each purchase is its own lot. When you average down, the new shares start a new holding period. Selling later may mix long-term and short-term lots, and your broker's lot method (first-in-first-out by default, or specific identification) decides which shares are sold.
- The wash-sale rule. If you sell shares at a loss and buy substantially identical shares within 30 days before or after the sale, the loss is disallowed for now and added to the cost basis of the replacement shares. Buying more and then selling the older, higher-cost lot at a loss within that window is a common way to trigger it.
Because your tax depends on income, holding periods and every other trade you make in the year, the calculator leaves capital gains tax out of the break-even price.
Changing the rates in the calculator
Open “Fees & tax” under the inputs to set your own buy commission, sell commission and sell tax. The average including fees and the break-even price update right away. Nothing you type is sent anywhere.