S-Corp Tax Savings Calculator
S-Corp Tax Savings Calculator
Compare SE tax vs S-Corp salary + distribution split — see your annual FICA savings.
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Professional Financial Tools
7/28/2026
Net profit before any owner salary — line 31 of Schedule C, or S-Corp net income before W-2.
The IRS requires a "reasonable" salary. A common rule of thumb is 40–60% of net profit. Use the Reasonable Salary Calculator to dial this in.
Payroll service (~$500–$1,500/yr) + additional CPA fees (~$1,000–$2,000) + state fees. Get quotes before assuming.
Every CPA will tell you that an S-Corp can save you money on taxes. Very few will show you the math before you pay them to set one up. This S-Corp tax savings calculator does exactly that: it compares your total tax burden as a sole proprietor or single-member LLC against what you'd owe as an S-Corp owner-employee, down to the dollar, using 2026 IRS figures.
The core mechanic is the self-employment (SE) tax split. As a sole prop, every dollar of net profit is subject to SE tax — 15.3% on the first $184,500 of earnings and 2.9% above that. As an S-Corp, you pay yourself a W-2 salary and FICA taxes apply only to that salary. The remaining profit flows out as a K-1 distribution, which is not subject to FICA at all. The savings come from keeping that distribution out of FICA scope.
Enter your net profit, filing status, proposed salary, and estimated admin costs to see whether — and by how much — an S-Corp election makes sense for your situation.
A freelance consultant earns $150,000 net profit in 2026 and is considering an S-Corp election. They propose a $75,000 W-2 salary and estimate $2,500/year in admin costs.
As a sole proprietor:
As an S-Corp ($75,000 salary):
Net annual savings: $6,053
FICA reduced by $9,719 ($21,194 SE tax − $11,475 FICA); federal income tax increases by $1,166 (smaller above-the-line deduction); net of $2,500 admin = $6,053 saved.
Not modelled in this calculator: the QBI deduction (20% deduction on qualified business income, available to both sole props and S-Corps on the distribution amount), the 0.9% Additional Medicare Tax above $200,000, state income tax, and the self-employed health insurance deduction. A CPA can layer these in once you have the baseline FICA comparison this tool provides.
An S-Corp is a pass-through entity: the corporation itself pays no federal income tax. Profit flows through to your personal return in two ways:
The IRS is aware of this structure and has an explicit requirement: you must pay yourself a reasonable salary for the services you perform. Underpaying to maximize the FICA-free distribution is the fastest way to trigger a payroll tax audit (Revenue Ruling 74-44). The IRS has successfully recharacterized distributions as wages in court in cases where the salary was clearly below market for the work done.
That said, "reasonable" is not the same as "100% of profit." Most advisors consider 40–60% of net profit a defensible starting point for owner-operators who also handle all client work. Use the Reasonable Salary Calculator on this site to triangulate the number using three methods: market wage, revenue percentage, and profit split.
The S-Corp breakeven point depends on your admin costs and the salary percentage you use. At a 50% salary split and $2,500/year in admin costs, the S-Corp starts saving money at roughly $55,000–$60,000 in annual net profit for a single filer. Below that, the FICA savings don't cover the overhead.
S-Corp usually makes sense when:
S-Corp probably doesn't make sense when:
The default in this calculator is $2,500/year, which is a reasonable median estimate for a simple single-owner S-Corp. The actual cost varies significantly:
Get quotes from a payroll service and your CPA before assuming $2,500. In expensive states or with complex tax situations, real admin costs can run $4,000–$6,000/year, which shifts the breakeven point significantly higher.
It depends entirely on your state. S-Corps are pass-through entities, so most states tax S-Corp income at the individual level the same way they'd tax sole prop income — no difference. But some states have S-Corp-specific taxes or franchise minimums (California being the most significant), and a handful of states have enacted pass-through entity (PTE) elections that can interact with S-Corp status in complex ways. Check with a CPA who knows your state.
Yes, with restrictions. To be effective for a given tax year, Form 2553 must generally be filed by March 15 of that year (for calendar-year corporations) or within 2 months and 15 days of formation. Late elections may be granted relief under Rev. Proc. 2013-30 if you had reasonable cause for missing the deadline. If you're planning an election for 2027, the cleaner move is to file Form 2553 by March 15, 2027.
Yes — a single-member LLC can elect S-Corp tax treatment by filing Form 2553. You'd already have your LLC entity; the election just changes how the LLC is taxed. The savings math is the same either way.
Because the deductions are slightly different. As a sole prop, you deduct half your SE tax above the line (§164(f)). As an S-Corp, the employer FICA reduces your K-1 income, which is a smaller deduction at higher income levels. The FICA savings are always larger than this income-tax increase, which is why the net result is still positive — but the income tax line can look higher on the S-Corp side, and that's expected and correct.
The qualified business income (QBI) deduction (§199A) lets eligible sole props and S-Corp owners deduct up to 20% of qualified business income. For S-Corp owners, QBI applies to the K-1 distribution amount (not the W-2 salary). This can meaningfully change the after-tax picture, especially at incomes below the phase-out thresholds ($197,300 single / $394,600 MFJ in 2026). Modelling QBI requires knowing your total income and business type, so it's beyond the scope of this quick-comparison tool — flag it with your CPA.
If you've been searching for an S-Corp tax calculator that doesn't require an account, a subscription, or an upsell, you've found it. This free S-Corp tax savings calculator uses 2026 IRS figures — the current Social Security wage base of $184,500, the §1402(a)(12) SE net earnings factor of 92.35%, and 2026 federal income tax brackets — to give you a real comparison between your current sole prop or LLC tax burden and what you'd owe as an S-Corp.
The S-Corp salary calculator component works by letting you set your proposed W-2 salary, then computing FICA on that salary only. The remainder of your profit passes through as a K-1 distribution — not subject to self-employment tax. That gap between your current SE tax and your S-Corp FICA is where the savings come from.
For a complete S-Corp tax planning toolkit, pair this with the Reasonable Salary Calculator (which tells you what salary the IRS expects) and the S-Corp vs LLC Calculator (which shows the exact income where the election pays off).
See your 2026 marginal and effective tax rates with bracket breakdown.
Estimate your annual federal income tax liability.
IRS-defensible W-2 salary estimate using market rate, revenue, and profit-split methods.
Crossover chart — the exact profit threshold where S-Corp saves more than it costs.
Take-home pay after federal, state & FICA taxes.
SE tax (Social Security + Medicare) plus an optional combined federal income tax estimate for 1099 and freelance income.
Go deeper than the calculator — the full playbook, explained.
How self-employment tax is calculated, what's actually deductible, how it combines with federal income tax, and how to size your quarterly payments — with calculators.
A complete guide to S-Corp tax elections — how the savings work, when to elect, how to set a reasonable salary, and what compliance actually costs. Verified 2026 figures.