Carried Interest Calculator

Background.

Carried interest is the fund manager's share of the profit — the slice of a private-equity or venture fund's gains that goes to the general partner rather than to the investors who supplied the money. It sits alongside the management fee but works differently: the fee, conventionally around 2% a year, is paid whether or not the fund does well, while the carry, conventionally 20%, is paid only out of gains. Some venture firms with long records charge 25% or 30%.

The percentage is the easy part. What makes carry hard to pin down is the base it applies to. Many buyout funds first hand investors their capital back and then pay them a preferred return, often 8% a year, before the manager sees anything; venture funds frequently skip the preferred return. After that the agreement decides. Under a hard hurdle the manager takes its percentage only of profit above the preferred return. Under a catch-up the manager takes most or all of the next distributions until it holds its percentage of the entire profit, so the hurdle delays the carry without shrinking it.

This page leaves that waterfall to you. Enter the profit that is actually subject to the carry split and the carry percentage, and it returns the manager's share and what is left of that profit for the limited partners. It does not model the preferred return, a catch-up, clawback, deal-by-deal waterfalls, management fees or tax, so the fund's limited partnership agreement is where to look before deciding which figure belongs in the first box. The output is arithmetic on your numbers, not investment or tax advice.

What is carried interest calculator?

Carried interest is a contractual share of a fund's investment profits allocated to the general partner, the firm that runs the fund, once the conditions in the partnership agreement have been met. It is paid out of gains, never out of investors' capital, and it is the performance-linked part of a manager's pay. Here it is calculated as one percentage of whatever profit you designate as eligible, in US dollars, with the remainder of that profit attributed to the investors.

How to use this calculator.

1. 01Work out the profit eligible for carry from the fund's distribution waterfall: total proceeds, less the capital investors contributed, less the preferred return if the agreement uses a hard hurdle.
2. 02If the agreement has a full catch-up and the fund has cleared it, enter the whole fund profit instead, because the manager ends up with its percentage of all of it.
3. 03Enter the carry percentage written in the agreement — 20 is the conventional figure, but check, as some funds use a tiered rate that rises with performance.
4. 04Read the carry and the remaining eligible profit. That remainder is only part of what investors receive; their returned capital and any preferred return come on top.

The formula.

Carry = P × c ÷ 100, and Remainder = P − Carry, where P is the profit eligible for carry in dollars and c is the carried-interest percentage. Because it is a single multiplication, the result moves in exact proportion to both inputs: double the eligible profit and the carry doubles; raise the rate from 20% to 25% and the carry rises by a quarter. All the difficulty lives in P. Two funds with identical gains and the same 20% rate can pay their managers very different sums depending on whether profit is measured after a hard hurdle or with a catch-up, whether it is pooled across the whole fund or taken deal by deal, and whether management fees are returned to investors first. The page takes P as given and applies nothing beyond the percentage.

A worked example.

Frequently asked questions.

References& sources.

1. [1]OpenStax, Rice University. Principles of Finance, 2022. Chapters 6–10. Retrieved 2026-08-06.
2. [2]U.S. Internal Revenue Service. Tax guidance current 2026. Official forms, instructions and tax topics. Retrieved 2026-08-06.
3. [3]U.S. Securities and Exchange Commission. Investor.gov current 2026. Investment products and risk. Retrieved 2026-08-06.