The report shelf
The S-Corp Savings Index 2026
The same question, answered at ten profit levels: what does an S-corp election actually save? Every number below comes from a published formula and 2026 IRS figures, so you can check our math.
Break-even
$60,000
First modeled band where the election clears its own overhead.
Peak savings rate
7.4%
of profit kept at $200,000, the model's sweet spot.
At $500,000
$6,391/yr
Modeled net savings at the top band, every year it compounds.
Net savings by profit band
The full index
| Net profit | Modeled salary | Distribution | SE tax (sole prop) | Payroll tax (S-corp) | Net savings | Rate |
|---|---|---|---|---|---|---|
| $60,000 | $45,000 | $15,000 | $8,478 | $6,885 | $393 | 0.7% |
| $80,000 | $45,000 | $35,000 | $11,304 | $6,885 | $3,219 | 4.0% |
| $100,000 | $45,000 | $55,000 | $14,130 | $6,885 | $6,045 | 6.0% |
| $125,000 | $50,000 | $75,000 | $17,662 | $7,650 | $8,812 | 7.0% |
| $150,000 | $60,000 | $90,000 | $21,194 | $9,180 | $10,814 | 7.2% |
| $200,000 | $80,000 | $120,000 | $28,234 | $12,240 | $14,794 | 7.4% |
| $250,000 | $100,000 | $150,000 | $29,573 | $15,300 | $13,073 | 5.2% |
| $300,000 | $120,000 | $180,000 | $30,912 | $18,360 | $11,352 | 3.8% |
| $400,000 | $160,000 | $240,000 | $33,591 | $24,480 | $7,911 | 2.0% |
| $500,000 | $200,000 | $300,000 | $36,269 | $28,678 | $6,391 | 1.3% |
Three readings of the index
The savings curve bends twice. Below roughly $75,000, the salary floor eats most of the distribution and the election barely clears its own admin cost. The steep part of the curve runs from six figures to the Social Security wage base ($184,500 in 2026); in this range every marginal dollar shifted from salary to distribution avoids the full 15.3%. Above the wage base, sole proprietors stop paying the 12.4% Social Security piece on marginal dollars anyway, so the index keeps growing but at the slower 2.9% Medicare rate.
The rate peaks in the middle. As a share of profit, savings peak near $200,000: high enough that the distribution dwarfs the salary floor, low enough that every distributed dollar would otherwise have paid full SE tax. If your profit is in this band and you are still filing Schedule C, you are in the most expensive possible configuration.
It compounds. These are annual figures. A $150,000 business that keeps its modeled $10,814 each year and invests it is ahead by well over six figures within a decade, before growth.
Methodology, in full
- Modeled salary = the greater of $45,000 or 40% of profit, capped at profit. See our Reasonable Salary Calculator for how a real salary gets set.
- Sole-proprietor SE tax = 92.35% of profit, taxed 12.4% up to the 2026 Social Security wage base ($184,500, Rev. Proc. 2025-32) plus 2.9% Medicare, uncapped.
- S-corp payroll tax = the same rates applied to the modeled salary only (employee and employer halves combined).
- Net savings subtracts a flat $1,200/year payroll and filing overhead estimate.
- Deliberately excluded: state taxes, the QBI interaction (salary shifts some deduction), retirement-plan strategies, and the 0.9% Additional Medicare Tax. Each moves individual results; none changes the shape of the curve.
Your actual number beats the model
The index uses a modeled salary; your savings depend on your real one, your state, and your deductions. Run your income through the S-Corp Tax Savings Calculator or book a free review and we will compute it from your actual books.
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