---
title: "Taxes toggle"
description: "The taxes toggle decides whether a backtest deducts tax on dividends and realized gains, or shows results gross of tax — it switches the view of one run."
canonical_url: "https://fincanva.com/docs/backtesting/taxes-toggle"
last_updated: "2026-09-04"
md_url: "https://fincanva.com/docs/backtesting/taxes-toggle.md"
---

# Taxes toggle

The taxes toggle is the [simulation assumption](/docs/backtesting/simulation-assumptions) that decides whether a backtest deducts tax, or shows its results gross of tax. In the app it is the switch labelled **Taxes**, described as "Tax on dividends & realized gains" and shortened to "Taxes" in the assumptions summary. Like the other assumptions it switches what the *same run* is showing; the strategy and its history are untouched.

**Also seen as:** Taxes, taxation

## What does turning taxes on change?

Turning **Taxes** on applies your saved tax settings to the run and deducts the resulting tax from its results. Those settings are your [tax residency](/docs/backtesting/tax-residency), your [tax regime](/docs/backtesting/tax-regime), the short-term and long-term [capital-gains](/docs/backtesting/capital-gains-tax) rates, and the [dividend tax](/docs/backtesting/dividend-tax) rate.

Two kinds of event are taxable, and one is not:

- **Realized gains** — a position closed at a profit is taxed at the applicable capital-gains rate.
- **Dividends** — dividend income is taxed at the dividend rate, so the strategy is credited the net amount.
- **Open (unrealized) gains** are not taxed: a holding you still own has not produced a taxable event, however far it has risen.

With the toggle off, the tax line is zero and every figure is gross of tax.

## Defaults in Fincanva

- **Taxes are included from the Advanced plan.** Free and Starter run every backtest with the assumption off and cannot turn it on; Advanced, Ultimate and Professional include it. See [what each plan includes](/docs/account-security/what-each-plan-includes).
- **Taxes is off by default**, so the first figures you see are gross of tax.
- Flipping it switches the displayed result immediately, with no new run — the after-tax variant was pre-computed when the strategy ran (see [simulation assumptions](/docs/backtesting/simulation-assumptions)).
- The tax deducted appears as the "Taxes" band in the capital and [P&L breakdown](/docs/analysis/p-l-breakdown).
- The rates behind the toggle are saved settings: editing one is a settings change that takes effect only after the strategy runs again.
- The toggle is independent of the [costs toggle](/docs/backtesting/costs-toggle) — you can view a run after tax but before costs, or any other combination.
- The Holdings view does not follow this toggle: it always reports with taxes off, one of its [Holdings forced assumptions](/docs/backtesting/holdings-forced-assumptions).

## Worked example

One run, two views. With **Taxes** off a strategy's curve ends at a total return of +42.0%, gross of tax. Flip Taxes on and the same curve ends lower — say +34.8% — because the gains the strategy realized along the way were taxed at the capital-gains rate and each dividend was credited net of the dividend rate. When that tax actually leaves the simulated account depends on the [tax regime](/docs/backtesting/tax-regime) — as events occur under Administered, once a year under Declarative — rather than at the moment of every individual gain. The 7.2pp difference is not a different strategy or a different period: it is the same run with the tax that its trades and dividends would have triggered taken out. A strategy that realizes gains often meets that deduction more often than one that holds its winners.

*The figures on this page describe what Fincanva models, not what you should do with your money — see [Is this financial advice?](/docs/investing-theory/is-this-financial-advice#is-this-financial-advice).*