S-Corporation Tax Savings Calculator
Estimate your potential tax savings when electing S-Corp status
📚 New to S-Corps? Read our Complete S-Corporation Tax Guide first
Calculate Your Potential Savings
Your business profit before owner compensation
State taxes, fees, and PTET elections significantly impact your savings
Industry affects reasonable salary requirements
Typical range: 30-50% of net income based on industry and role
⚠️ IRS requires reasonable compensation. Too low = audit risk.
This affects Social Security tax calculations
Your Estimated Tax Comparison*
⚠️ Important Disclaimer
This calculator provides general estimates only. Actual tax savings will vary based on numerous factors including but not limited to: reasonable compensation requirements, state taxes, QBI deduction eligibility, business expenses, and individual tax situations. Results are hypothetical and for educational purposes only. Always consult with a qualified CPA before making entity election decisions.
Personalized Analysis
Calculations tailored to your specific income level and industry
Reasonable Salary
Estimates based on IRS guidelines and industry standards
Complete Picture
Includes additional S-Corp costs for realistic comparison
State Considerations
Factors in state tax implications for your location
How the S-Corp Tax Calculator Works
Our calculator estimates potential tax savings by comparing your current LLC/sole proprietorship tax burden with projected S-Corporation taxes. For a comprehensive understanding of S-Corporation taxation, read our Complete S-Corporation Tax Guide. Here’s what we consider:
- Self-Employment Tax: Currently 15.3% on all net income as LLC
- Reasonable Salary: Industry-specific percentage of net income
- Payroll Taxes: 15.3% only on W-2 wages as S-Corp
- Additional Costs: Payroll service, tax prep, compliance (~$3,500/year)
- State Factors: Impact varies by location
The calculator provides an estimate to help you understand if S-Corp election might be beneficial. Individual circumstances vary significantly.
LLC vs S-Corp: Break-Even Analysis
See how savings change at different income levels (assumes 40% reasonable salary)
| Net Income | LLC Tax Cost | S-Corp Tax | S-Corp Costs | Net Savings |
|---|---|---|---|---|
| $50,000 | $7,065 | $3,060 | $3,500 | -$505 |
| $75,000 ✓ | $10,597 | $4,590 | $3,500 | +$2,507 |
| $100,000 | $14,130 | $6,120 | $3,500 | +$4,510 |
| $150,000 | $19,420 | $9,180 | $3,500 | +$6,740 |
| $200,000 | $22,952 | $12,240 | $3,500 | +$7,212 |
| $300,000 | $26,775 | $15,147 | $4,000 | +$7,628 |
📊 Key Insight: The $75,000 income mark is typically the break-even point where S-Corp tax savings exceed additional costs. Your specific break-even depends on reasonable salary, state taxes, and business expenses.
When S-Corporation Election May Make Sense
While every situation is unique, S-Corporation election often becomes worth considering when:
- Your net business income consistently exceeds $75,000 annually
- You can establish and document reasonable compensation
- Your business has predictable, stable income
- You’re comfortable with additional compliance requirements
- The tax savings exceed the additional costs
Remember, S-Corp election is not reversible without consequences. Learn more in our detailed S-Corp guide or consult with a tax professional to evaluate your specific situation.
Frequently Asked Questions
How accurate is this calculator?
This calculator provides general estimates based on common scenarios and industry averages. Actual results will vary based on your specific circumstances, state laws, reasonable compensation determination, and other factors. It’s designed to give you a starting point for discussion with a tax professional, not a definitive answer.
What is “reasonable salary” for S-Corps?
Reasonable salary is what you would pay someone else to do your job, based on your experience, duties, and industry standards. The IRS requires S-Corp owner-employees to receive reasonable compensation. This typically ranges from 30-50% of net income but varies significantly by situation. Our S-Corp guide covers reasonable salary in detail.
What costs are included in the S-Corp estimate?
We include estimated costs for payroll service ($600-1,800/year), additional tax preparation ($800-2,000), state fees ($100-800), and compliance requirements. These typically total $2,500-5,000 annually. Your actual costs may differ.
Does this calculator consider QBI deduction?
The calculator focuses on self-employment tax savings. The Qualified Business Income (QBI) deduction may provide additional benefits but depends on many factors including income levels, W-2 wages, and type of business. See our guide’s QBI section or consult a CPA for complete analysis.
Should I rely solely on this calculator to make my decision?
No. This calculator is an educational tool to help you understand potential savings. Entity election is a significant decision with tax, legal, and operational implications. Always consult with qualified professionals who can analyze your complete situation.
Get Professional S-Corp Analysis
Ready for a detailed analysis of your specific situation? Our CPAs can provide personalized guidance on S-Corporation election and tax optimization strategies.
Schedule Professional ConsultationUnderstanding Calculator Limitations
This calculator makes several assumptions that may not apply to your situation:
- Assumes single owner (multiple owners affect calculations)
- Uses industry averages for reasonable salary
- Estimates typical S-Corp costs (actual vary by provider)
- Doesn’t account for all state-specific rules
- Excludes impact of other income sources
- Doesn’t calculate income tax effects
Results are hypothetical and may not reflect your actual tax situation. Tax laws change frequently. This calculator reflects general tax principles as of 2026 but may not include recent changes. Professional consultation is essential for accurate analysis.