S-Corp vs LLC Tax Calculator

The question is not whether an S-Corp saves taxes — it generally does, at sufficient income. The question is at what income do the tax savings exceed the S-Corp's overhead? That is the number most calculators skip. This S-Corp vs LLC tax calculator answers it directly with a side-by-side comparison across seven income levels and a plain-English breakeven point.

A single-member LLC taxed as a sole proprietor is simple: all net profit is self-employment income, you file Schedule C, done. An S-Corp requires payroll, a separate tax return (Form 1120-S), and more accounting work. The S-Corp makes financial sense only when FICA savings exceed those admin costs. The crossover depends on your salary percentage and what you pay for payroll and accounting.

Adjust the salary percentage and admin cost below to see the crossover for your specific situation.

The table below shows total federal tax burden (SE/FICA + income tax + admin costs where applicable) at each income level, verified against this calculator's formulas using 2026 IRS brackets and the $184,500 SS wage base:

Single filer, 50% salary, $2,500 S-Corp admin. Federal tax only — excludes QBI, state taxes, Additional Medicare (0.9%), and self-employed health insurance deduction.

Note that savings peak around $200,000 then begin to taper. This is because at very high incomes, the sole prop's SE tax also hits the SS wage base cap ($184,500), reducing the marginal benefit of routing income through an S-Corp. The Medicare portion (2.9%) still benefits from S-Corp treatment, but the gain per additional dollar narrows.

Two inputs move your crossover number most:

1. The salary percentage. A higher percentage means more income subject to FICA and less flowing as a tax-free distribution. At 70% salary (more defensible for high-service businesses), FICA savings shrink and breakeven rises. At 40% (aggressive but potentially defensible), savings are larger but audit risk increases.

2. Admin costs. A $4,500/year quote versus $2,500 raises your breakeven by roughly $15,000–$20,000 in net profit. Get quotes from at least two payroll services and ask your CPA exactly what they charge for Form 1120-S and the associated state return before deciding.

Your state matters. California adds an $800/year S-Corp minimum tax plus 1.5% of S-Corp net income. That alone can push breakeven above $80,000 in profit for California businesses. New York, Illinois, and Massachusetts also have state-level variations. This calculator models federal tax only.

A single-member LLC and an S-Corp are both pass-through entities — profit flows to your personal return either way. The difference is how that income is characterized for FICA/SE tax.

• LLC (taxed as sole prop): All net profit is self-employment income. SE tax applies to 92.35% of it at 15.3% (SS) + 2.9% (Medicare) rates. Simple, low overhead.
• LLC taxed as S-Corp (Form 2553 election): Your LLC makes an S-Corp tax election. Now you're an employee of your own LLC. Salary gets W-2 treatment; remaining profit is a K-1 distribution not subject to SE tax. More paperwork, but potential FICA savings.
• Incorporated S-Corp (separate entity): A corporation (C-Corp by default) that elects S treatment via Form 2553. Structurally separate from a sole prop or LLC. Can have some advantages in certain business sale scenarios.

For most solo service providers, the real choice is whether to keep the LLC as-is (Schedule C simplicity) or file Form 2553 to add S-Corp tax treatment. The underlying legal entity can stay the same LLC — only the tax classification changes.

The S-Corp vs LLC tax question comes down to a simple crossover: at what income does the FICA savings from an S-Corp election exceed the admin costs of running one? For most single-filer service businesses at a 50% salary split and $2,500 in admin costs, the answer is approximately $55,000–$60,000 in annual net profit. Below that, the LLC wins on simplicity and total cost. Above it, the S-Corp typically saves more each year.

This S-Corp vs LLC calculator shows you both sides of the comparison at seven income levels — $40k through $300k — using 2026 federal tax rates and the current $184,500 Social Security wage base. You can adjust the salary percentage (what portion of profit becomes W-2 wages) and admin cost estimate to match your actual situation. The chart shows where the lines cross and how much the S-Corp saves at each income point.

One nuance the chart reveals: S-Corp savings don't grow linearly with income. They tend to peak around $150,000–$200,000 for a 50% salary split, then plateau as the SS wage base cap also limits the sole prop's SE tax on the excess. The Medicare savings (2.9%) continue on the FICA-free distribution regardless of income, but the SS savings (12.4%, capped) diminish above the wage base.