LLC vs S Corp Tax Calculator 2026: See Your Savings

The LLC vs S Corp Tax Calculator helps small business owners compare the estimated employment-tax costs of standard sole proprietorship or LLC taxation with an S Corporation tax election. By entering your business profit, proposed owner salary, state, filing status, outside W-2 income, and S-Corp expenses, you can see how the two tax structures compare under the assumptions used by the calculator.

The main difference modeled by the calculator is how business earnings are exposed to employment taxes. Under the calculator's standard LLC model, net business profit is used to calculate self-employment tax. Under the S-Corp model, the owner receives W-2 compensation that is subject to payroll taxes, while the remaining profit is represented as a K-1 distribution in the calculator's comparison.

How the LLC vs S Corp Calculator Works

Start by entering your estimated annual net business profit. This represents business income after business expenses and before the owner compensation assumption used in the S-Corp comparison. The calculator then uses this amount to estimate the self-employment tax associated with the standard LLC scenario.

Next, enter the proposed reasonable W-2 salary for the S-Corp scenario. The calculator limits the salary to the available business profit and uses the salary to calculate Social Security and Medicare payroll taxes. The difference between business profit and the modeled salary is shown as the K-1 distribution.

LLC Self-Employment Tax Calculation

The LLC calculation begins by multiplying net business profit by 92.35% to determine the self-employment-taxable income used by the calculator. Social Security tax is then calculated using the remaining Social Security wage base after accounting for outside W-2 income. Medicare tax is calculated separately, and the calculator also considers Additional Medicare Tax when the applicable filing-status threshold is exceeded.

S Corporation Payroll Tax Calculation

For the S-Corp scenario, the calculator treats the proposed owner salary as W-2 compensation. Social Security and Medicare payroll taxes are calculated against the salary, while the modeled K-1 distribution is not included in the calculator's FICA calculation. The calculator then adds the annual S-Corp overhead entered by the user, including CPA preparation, payroll software, state fees, and other compliance costs.

Why Your W-2 Salary Matters

The proposed owner salary is one of the most important inputs in an S-Corp comparison. A lower salary generally reduces the portion of business income exposed to payroll taxes, while a higher salary increases payroll-tax exposure. However, the appropriate compensation level depends on the owner's actual role, duties, industry, experience, time commitment, and other facts. The calculator's salary percentage buttons are convenience inputs and should not be treated as an IRS-approved salary formula.

Outside W-2 Income and the Social Security Wage Base

If you already receive wages from another employer, enter that income in the Outside W-2 Job Income field. The calculator uses the entered amount when determining how much of the applicable Social Security wage base remains available for the business-related employment-tax calculation.

S-Corp Overhead and Compliance Costs

An S-Corp comparison should not focus only on gross payroll-tax savings. Additional costs can include tax-return preparation, payroll processing, bookkeeping, state-level fees, and other compliance expenses. This calculator allows these costs to be entered separately so they can be deducted from the estimated gross tax savings.

Break-Even Profit Analysis

The break-even analysis estimates the approximate level of business profit at which the modeled employment-tax savings offset the annual S-Corp overhead entered into the calculator. Because the result depends on salary, state costs, outside wages, and other assumptions, there is no single profit threshold that applies to every business.

LLC vs S Corp Side-by-Side Comparison

The results section presents the two scenarios side by side. The LLC section shows the net business profit, self-employment-taxable base, Social Security tax, Medicare tax, Additional Medicare Tax when applicable, and total self-employment tax. The S-Corp section shows the modeled W-2 salary, K-1 distribution, payroll tax, FICA treatment of the modeled distribution, annual overhead, and total S-Corp cost.

Estimated Annual and Monthly Savings

Gross tax savings represent the difference between the calculator's LLC self-employment tax and S-Corp payroll tax estimates. Net annual savings then subtract the S-Corp overhead entered by the user. Monthly savings are calculated by dividing the estimated net annual savings by twelve.

Who Can Use This Calculator?

This calculator can be useful for freelancers, consultants, independent contractors, online business owners, agency owners, ecommerce operators, professional service providers, and other small business owners who are comparing standard LLC taxation with an S-Corp tax election.

Important Limitations

The calculator is an estimation tool rather than a complete tax-return preparation system. Actual tax results can depend on federal income tax, state and local taxes, deductions, credits, retirement contributions, QBI rules, payroll taxes, unemployment taxes, health insurance, business expenses, ownership structure, and other circumstances that may not be represented in this model.

The reasonable salary field is an assumption supplied by the user. The calculator does not independently establish what compensation is reasonable for a particular owner. Likewise, the salary percentage buttons are shortcuts for modeling different assumptions and are not official IRS compensation guidelines.

Use the results as a planning estimate and discuss your specific circumstances with a qualified CPA, enrolled agent, or tax professional before making an S-Corp election or changing your compensation structure.