2026 S corp math

S Corp Tax Calculator: LLC vs S Corp Savings for 2026

Free S corp tax calculator and LLC tax calculator for 2026. Enter your net profit and an S corp reasonable salary, then see LLC vs S corp side by side: the 15.3% self-employment tax you pay today against payroll tax on the salary, minus what payroll and the extra return cost.

Real 2026 IRS figures The number on this page, no gate Costs counted, not just savings

How much will you clear in 2026?

$20,000Net profit after expenses, before any owner pay$500,000+

State (optional)

Reasonable salary

Suggested: $60,000. find your defensible range

Net savings as an S corp

$10,214 / year

Self-employment tax as a sole prop or LLC: $21,194
Payroll tax on $60,000 salary as an S corp: $9,180
Payroll-tax savings before costs: $12,014
Payroll service and Form 1120-S prep: -$1,800
Distribution left after salary: $90,000

The S corp wins

At $150,000 of profit with a $60,000 salary, the election clears its own costs by $10,214 a year. Worth filing.

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TY2026 figures. Costs assume $600 a year of payroll service and $1,200 for the S corp return; California adds its 1.5% franchise tax above the $800 every LLC pays. Income tax is not modeled. Estimate only, not tax advice.

Before you elect

Three things the calculator assumes you know

When the S corp wins

As a sole proprietor or default LLC, self-employment tax applies to 92.35% of everything you clear: 12.4% for Social Security up to the annual wage base and 2.9% for Medicare on all of it. As an S corp, that same 15.3% applies only to the salary you pay yourself. Whatever is left is a distribution, and distributions do not pay it.

The saving is 15.3% of the gap between your profit and your salary. At $150,000 of profit with a $60,000 salary that gap is $90,000, so the payroll-tax saving is roughly $13,000 before costs. At $60,000 of profit with a $40,000 salary the gap is $20,000 and the saving is about $3,000, which the costs below eat. That is why the answer is a threshold, not a yes.

The savings at every profit band, with the formula →

The reasonable salary trap

The calculator suggests 40% of profit with a $40,000 floor as a starting salary, because that is the range most one-owner service businesses land in. It is a starting point, not a rule. The IRS requires the salary to be reasonable for the work you do, and the owners who lose reasonable-compensation cases are the ones who picked a round number to minimize tax and never wrote down why.

Every dollar you add to the salary costs 15.3 cents of savings, so the temptation runs one way. Anchor it instead on what hiring your hours would cost and on how much of the profit comes from your labor rather than your audience, brand, or systems, and document it before the year starts.

Build a defensible S corp reasonable salary range →

What it costs to run one

An S corp is a payroll employer and a separate filer. The calculator charges $600 a year for a payroll service that files the quarterly 941s and the W-2, and $1,200 for the Form 1120-S return on top of your personal return. Real quotes range on both sides of those numbers; change the salary and profit to see how much room they leave.

State treatment varies. California charges S corps 1.5% of net income with an $800 minimum, and the calculator adds the portion above the $800 every California LLC already pays. Other states charge flat franchise taxes that an LLC would owe anyway, or nothing, and a handful tax S corps in ways the calculator does not model. Add the cost of clean monthly books to all of it: an S corp with no ledger behind its salary and distributions is the one that gets questions.

The full election-to-payroll checklist →

Want the election filed, the salary documented, and payroll run from your real books?

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LLC vs S corp questions

What is the difference between an LLC and an S corp?+

An LLC is a legal structure. An S corp is a tax election that changes how the profit is taxed: part as salary that pays payroll tax, part as distributions that do not. Most owners who "become an S corp" keep their LLC and file Form 2553 on top of it, so LLC vs S corp is really default taxation vs the election, not one entity vs another.

At what income does an S corp start to make sense?+

Usually somewhere above $80,000 of net profit, once the payroll-tax savings clear the cost of running payroll and filing a separate return. The exact line depends on the salary you can defend and your state, which is why the calculator lets you change both instead of quoting one number.

I already have an LLC. Do I need to start over?+

No. An LLC can elect S corp tax treatment by filing Form 2553. The election is due within two months and fifteen days of the start of the tax year it should apply to, and there is a late-election path for many owners who missed it. Nothing about the LLC itself changes.

Why does the reasonable salary matter so much?+

Salary is the only part of S corp profit that pays the 15.3%. Set it too low and the IRS can reclassify distributions as wages, with payroll taxes, penalties, and interest attached. Set it too high and the savings quietly disappear. A documented range built from what your work would cost to replace is the defensible middle.

Find your reasonable salary range →

Estimate only, using TY2026 federal payroll figures: the Social Security wage base, Medicare, and the additional Medicare tax at the single-filer threshold. Income tax, the QBI deduction, and state income tax are not modeled; California's S corp franchise tax is. Not tax advice.

Terms behind this calculator

S election/Form 1120-S/Shareholder distributions/QBI deduction/Built-in gains tax

Amadae members never run this calculator.

We run the LLC vs S corp math from your live books, file the election when it saves more than it costs, set and document the salary, and run the payroll.

Book Free Review

S Corp Tax Calculator: LLC vs S Corp Savings for 2026

Real 2026 IRS figures The number on this page, no gate Costs counted, not just savings

Three things the calculator assumes you know

Want the election filed, the salary documented, and payroll run from your real books?

Book Free Review

Free 30-minute review. No pitch deck.

LLC vs S corp questions

What is the difference between an LLC and an S corp?+

At what income does an S corp start to make sense?+

I already have an LLC. Do I need to start over?+

Why does the reasonable salary matter so much?+

Find your reasonable salary range →