Free Tool · Updated for 2026

Free S-Corp vs LLC Tax Savings Calculator

See how much self-employment tax you could save by electing S-corp status for your LLC. Enter your profit and a reasonable salary to compare 2026 payroll taxes and the extra costs of an S-corp. This is an estimate, not tax advice.

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Try an example:

Net business profit before paying yourself ($) Reasonable salary you would pay yourself as an S-corp ($) Extra yearly S-corp costs: payroll service, separate tax return, state fees ($) Social Security wage base ($)

$184,500 is the 2026 Social Security wage base. Additional 0.9% Medicare tax and state taxes are not included.

S-corp vs single-member LLC

estimated yearly payroll-tax savings

LLC self-employment tax$0

S-corp payroll taxes on salary$0

Extra S-corp costs$0

Left for distributions (est.)$0

How it works

How the S-corp tax savings are calculated

As a sole proprietor or single-member LLC, you pay self-employment tax of 15.3% on 92.35% of your whole net profit (12.4% Social Security up to the wage base, plus 2.9% Medicare). When your LLC is taxed as an S corporation, you pay yourself a reasonable salary through payroll. Social Security and Medicare tax apply to that salary, and the rest of the profit can come out as distributions that carry no payroll tax.

LLC side: profit × 92.35% × 15.3% (Social Security capped at the wage base).
S-corp side: 15.3% employer and employee payroll tax on the salary, plus federal unemployment tax (0.6% of the first $7,000).
Subtract the extra costs of running payroll and filing Form 1120-S.

Income tax is roughly the same either way, so it is left out. The qualified business income deduction and state rules can change the result, so review the decision with your tax preparer. Read our guide: S-corp vs LLC taxes: when the election saves money.

Before you elect

What an S-corp needs from your bookkeeping

An S-corp means monthly payroll, quarterly Form 941 filings, a W-2 for you, a separate business tax return and clean books that separate salary, distributions and owner expenses. Our payroll management and monthly bookkeeping services handle this for you.

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FAQ

S-corp tax questions

When does an S-corp election start to save money?+

It depends on your profit, a reasonable salary for your role and your extra costs. Many owners start looking at it once profit is well above what a reasonable salary for their work would be. The calculator shows where the payroll-tax savings outweigh the costs.

What is a reasonable salary for an S-corp owner?+

It is what the business would pay someone else to do your job, based on your role, hours, industry and location. The IRS can reclassify distributions as wages if your salary is unreasonably low.

Does an S-corp reduce income tax?+

Not directly. Salary and distributions are both taxed as income on your personal return. The main saving is on Social Security and Medicare tax on the distributions.

How do I elect S-corp status for my LLC?+

An eligible LLC files Form 2553 with the IRS. The deadline for the current tax year is generally 2 months and 15 days after the start of that year. Late-election relief may be available.

Thinking about an S-corp election?

Book a free consultation. We will set up payroll, keep your books S-corp ready and give your tax preparer clean numbers.

Book Free Consultation Call +1 (832) 240-0830