How profit splits work in prop trading
A profit split is the arrangement between a prop firm and a funded trader that determines how generated profits are divided. If a firm offers an 80/20 split, the trader keeps 80% of all profits generated on the funded account and the firm retains 20%. This is the core commercial arrangement that makes the prop firm model work: the firm provides capital and absorbs downside risk in exchange for a portion of the upside.
Why the split percentage is not the whole story
Many traders focus exclusively on the profit split percentage when choosing a firm. But a higher split on a firm with strict rules, poor support, and slow payouts may be worse in practice than a lower split on a reliable firm with fast payouts and flexible rules. The split percentage should be considered alongside: minimum payout thresholds, payout frequency, withdrawal processing time, and the firm's track record for actually paying traders on time.
A 90% split at a firm that takes 3 weeks to process withdrawals or that has a pattern of finding reasons to dispute payouts is worth less than an 80% split at a firm with a transparent, reliable withdrawal process.
Profit split vs evaluation cost: the real calculation
The most useful way to compare prop firms is to calculate the break-even period: how many months of trading at your expected monthly return does it take to recover the evaluation fee? For a $300 evaluation on a $100,000 account with an 80% split and a 1.5% monthly return ($1,500 gross, $1,200 take-home), break-even is 0.25 months — a quarter of a month. The evaluation fee is recovered very quickly.
At a more modest 0.5% monthly return ($500 gross, $400 take-home), the same evaluation takes 0.75 months to recover. These numbers show that for consistent traders, evaluation cost is a minor factor. For inconsistent traders who may fail multiple evaluations, the cost compounds quickly — making firm choice and personal consistency equally important.
Scaling and increased splits over time
Many prop firms offer increasing profit splits as traders demonstrate long-term consistency. A common structure starts at 75% or 80% and scales to 85% or 90% after 3–6 months of profitable trading above a threshold. These scaling plans are worth reading carefully: the conditions (minimum monthly profit, no drawdown breaches, minimum trading days) may be more demanding than they appear, and the increased split may only apply to profits above a certain level.
When evaluating scaling plans, model the actual income difference. Going from 80% to 90% on $2,000 monthly profit means an extra $200 per month. That is meaningful over time, but it should not be the primary reason to choose a firm if other terms are worse.
Tax implications of profit splits
In most jurisdictions, your share of prop firm profits is taxable income. The firm's portion is not — you never receive it. Keep clear records of all payouts received, as tax authorities typically require documentation of trading income. Consult a qualified tax adviser for guidance specific to your country and situation, as the treatment of prop trading income varies significantly across jurisdictions.
This calculator is for informational purposes only and does not constitute financial or tax advice.