S-Corp Tax Calculator

🇺🇸 Free Tool · 2026 Tax Year
S-Corp Tax Calculator: see how much an S corporation election could save you
Compare self-employment tax as a sole proprietor / LLC against payroll tax as an S-corp owner, using the real 2026 IRS rates — 15.3% FICA and the $184,500 Social Security wage base.
Self-employment tax as sole proprietor / LLC–
Payroll taxes as S-corp (employee + employer FICA on salary)–
Profit taken as distributions (no FICA)–
S-corp running costs–

How the S-corp tax saving works

As a sole proprietor or single-member LLC, your entire net profit is hit with 15.3% self-employment tax (12.4% Social Security up to $184,500 in 2026, plus 2.9% Medicare on everything). When you elect S corporation status, you split your profit into two streams: a reasonable salary (which pays FICA payroll taxes) and shareholder distributions (which don't). The saving is roughly 15.3% of everything you legitimately take as a distribution instead of salary.

The catch is the word reasonable. The IRS requires your salary to reflect what you'd pay someone else to do your job — set it artificially low and you invite an audit and back taxes. Most owners land somewhere between 40% and 60% of profit, backed by industry salary data.

When an S-corp election makes sense in 2026

The rule of thumb: an S-corp starts paying for itself once your net profit passes roughly $50,000–$60,000 a year. Below that, the payroll costs, extra bookkeeping, and the separate Form 1120-S return usually eat the FICA saving. Above it, savings compound fast — at $150,000 profit with a $70,000 salary, you're avoiding FICA on $80,000 of distributions, worth roughly $12,000 a year before costs.

Remember an S-corp changes how you're taxed, not what you earn — profit still flows to your personal return and is taxed at your normal income tax bracket either way. The QBI deduction (20% for pass-through businesses, made permanent from 2026) applies in both scenarios, though your salary itself isn't QBI.

Frequently asked questions

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

What you'd pay an unrelated person to do your role — courts look at duties, hours, qualifications, and comparable industry pay. Many owners use 40–60% of profit as a starting point, then document it with salary data.

How much does an S-corp save on taxes?

Roughly 15.3% of the profit you take as distributions instead of salary, minus payroll and filing costs. On $100,000 profit with a $50,000 salary, that's typically $6,000–$7,000 a year.

Do S-corp distributions avoid income tax too?

No — distributions avoid Social Security and Medicare (FICA) tax only. All S-corp profit, salary and distributions alike, still flows to your personal return and is taxed at your normal federal income tax rate.

When is the deadline to elect S-corp status for 2026?

File Form 2553 within 2 months and 15 days of the start of the tax year you want it to apply — for calendar-year businesses that was March 15, 2026, though late-election relief is often available.

Can a single-member LLC become an S-corp?

Yes — you keep the LLC legally and elect S-corp treatment for tax only, using Form 2553. The LLC then runs payroll for you as its employee-owner.

Thinking about the S-corp switch?

FincSol Accountancy handles the whole move — reasonable-salary analysis, Form 2553 election, payroll setup, and the 1120-S return — so you keep the FICA savings without the admin. Dedicated personal accountant. No long-term contract.

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This calculator is for guidance only and covers federal self-employment/FICA tax using 2026 rates (15.3%; Social Security wage base $184,500). It excludes federal and state income tax, which apply equally in both scenarios. Official guidance: irs.gov. See also our self-employment tax calculator and quarterly tax calculator.