S corp tax calculator
See whether electing S corp status beats staying a sole proprietor or single-member LLC, after payroll tax on your salary and the extra costs of running an S corp.
S corp election saves you
$0
a year in federal tax, after the extra S corp costs.
- SE tax (15.3 %) $0
- Income tax $0
- Payroll tax, both halves $0
- Income tax $0
- Extra costs $0
How the S corp side is worked out
| Salary (W-2) | - |
|---|---|
| Employer payroll tax (7.65 %) | - |
| Employee payroll tax (7.65 %) | - |
| K-1 profit (distributions) | - |
| QBI deduction (20 % of K-1) | - |
Owner-only S corp, federal tax only. Leaves out state taxes, unemployment taxes and the QBI limits that start at higher incomes. Talk to a tax professional before you elect.
How the two compare
| LLC or sole prop | S corp | |
|---|---|---|
| Social Security and Medicare | 15.3 % SE tax on 92.35 % of all profit | 15.3 % payroll tax on your salary only |
| Rest of the profit | Same SE tax | Distributions, no payroll tax |
| Deductions | Half of SE tax, QBI on profit | Employer payroll tax, QBI on K-1 profit only |
| Paperwork | Schedule C and SE | Payroll, Form 1120-S, K-1 |
The saving comes from the part of the profit above your salary. The QBI deduction works against it a little, because the 20 % only applies to the K-1 profit, not to your salary.
Not sure where you stand now? Start with the self-employment tax calculator or compare a job offer with the 1099 vs W-2 calculator.
Questions
How does an S corp save on taxes?
As a sole proprietor or single-member LLC, all your profit pays 15.3 % self-employment tax. With an S corp election, you pay yourself a salary that carries payroll tax, and take the rest as distributions, which do not. Income tax stays about the same.
At what profit does an S corp make sense?
It depends on your salary and your extra costs. With $2,000 a year of extra costs, the calculator shows savings of about $711 at $60,000 profit with a $35,000 salary, about $2,770 at $100,000 with a $50,000 salary, and about $5,416 at $150,000 with a $70,000 salary. At low profits the extra costs can wipe out the savings.
What is a reasonable salary for an S corp owner?
There is no IRS percentage. The IRS looks at factors such as your training and experience, duties, time spent on the business and what comparable businesses pay for similar services. If the salary is too low, the IRS can treat distributions as wages and charge the payroll taxes.
Is an LLC the same as an S corp?
No. An LLC is a legal structure set up under state law. A single-member LLC is taxed like a sole proprietor by default. An S corp is a tax election: an LLC or a corporation can choose to be taxed as an S corp by filing Form 2553 with the IRS.
What extra costs come with an S corp?
Running payroll for yourself, a separate business tax return (Form 1120-S), and in some states extra fees or taxes. Include them in the calculator, since they come straight out of the savings.
Sources
Last updated November 3, 2026. Figures for tax year 2026 from IRS and SSA sources.