---
title: "S Corp vs LLC Tax Savings Calculator (2026) | Ledgerbrook"
source: https://ledgerbrook.com/tools/s-corp-tax-calculator/
description: "Compare 2026 self-employment tax as an LLC with S corp payroll tax on your profit and salary, see what the election saves, and set a reasonable salary."
---

Free calculator

# S Corp Tax Calculator

## How much does an S corp save in tax?

An S corp splits profit into a W-2 salary, which carries 15.3% payroll tax, and distributions, which carry none. At **$100,000** of profit and a **$50,000** salary, 2026 tax falls from $14,130 of self-employment tax as a single-member LLC to $7,692 of payroll tax as an S corp, a saving of **$6,438** before payroll, return and state costs.

1\. Yearly business profit

Net profit before paying yourself: revenue less expenses.

2\. Your S corp salary50% of profit

What the business would pay someone else for your work. See [how to set a reasonable salary](#reasonable-salary).

Advanced: filing status, running costs, income tax

Filing statusSingle or head of householdMarried filing jointlyMarried filing separately

Extra yearly S corp costs

Federal income tax bracketLeave income tax out10%12%22%24%32%35%37%

Extra costs: payroll service, Form 1120-S preparation, state fees and state unemployment tax. Use your own quotes; they differ by state and provider. The bracket adds the income tax effect of the self-employment tax deduction, the deductible costs and the 20% qualified business income deduction, which applies to the S corp's profit after salary, not to the salary.

Estimated yearly saving

$6,438

Self-employment tax as sole proprietor or LLC

$14,130

S corp payroll tax, both shares

$7,650

Federal unemployment tax

$42

Extra S corp costs

$0

Income tax effect

Distributions, free of payroll tax

$46,133

The saving holds only if the books back it: owner payroll, distributions kept apart from wages, and a balance sheet the 1120-S can be prepared from. Ledgerbrook keeps S corp books in QuickBooks Online for $149 a month.

[Send your file for a free review →](/contact/?service=monthly)[What S corp bookkeeping involves](/blog/s-corp-bookkeeping/)

Ledgerbrook

The books behind these numbers, kept for you.

US small business bookkeeping in QuickBooks Online. Fixed prices, agreed before any work starts.

[Get a free file review](/contact/?from=tools%2Fs-corp-tax-calculator)

Bookkeeping or CPA firm? [We work under your name](/for-bookkeeping-firms/).

- [Behind on the booksCleanup and catch-up$99per month of backlog20% off 6+ monthsSee what's included](/quickbooks-cleanup/)
- [Every monthMonthly bookkeeping$149a month and upReconciled and closed every monthSee what's included](/monthly-bookkeeping/)
- [At year endCPA handoff pack$199a client, one-timeA file your CPA can file fromSee what's included](/for-cpas/)

Worked examples

## S corp savings by profit, 2026

Single filer, salary set at half of profit to keep the rows comparable. Half is an illustration, not a guide to what your salary should be. Savings are before the extra costs of running an S corp.

| Profit | Salary | Self-employment tax | S corp payroll tax | Saving |
| --- | --- | --- | --- | --- |
| $50,000 | $25,000 | $7,065 | $3,867 | $3,198 |
| $75,000 | $37,500 | $10,597 | $5,780 | $4,818 |
| $100,000 | $50,000 | $14,130 | $7,692 | $6,438 |
| $150,000 | $75,000 | $21,194 | $11,517 | $9,677 |
| $200,000 | $100,000 | $28,234 | $15,342 | $12,892 |
| $300,000 | $150,000 | $31,606 | $22,992 | $8,614 |

Your salary

## How much should I pay myself from my S corp?

A reasonable salary, which is what the business would pay someone else for the work you do. The IRS names no percentage of profit. A record of how the figure was reached is what holds up:

1. List the roles you fill, such as the work clients pay for, managing staff and admin, with a share of your hours for each.
2. Price each role from a wage survey for that occupation in your area, such as the Bureau of Labor Statistics' [Occupational Employment and Wage Statistics](https://www.bls.gov/oes/).
3. Scale for the hours you work, write the figure down with its sources, and run it through payroll on a fixed schedule.

Then enter it above. Every $10,000 of salary adds about $1,530 of payroll tax, so a lower salary saves more, but it also lowers the earnings your Social Security benefit is based on and the employer retirement contribution a 401(k) allows, which is figured on W-2 wages. A salary too low for the work lets the IRS treat distributions as wages and charge the payroll tax with penalties. The factors and the case law are in [S corp reasonable salary](/blog/s-corp-reasonable-salary/).

Method

## How the calculator works

- **Sole proprietor or single-member LLC:** self-employment tax of 12.4% Social Security and 2.9% Medicare on 92.35% of profit, per [Schedule SE](https://www.irs.gov/forms-pubs/about-schedule-se-form-1040).
- **S corp:** 6.2% Social Security and 1.45% Medicare from the owner, matched by the company, on salary only, plus federal unemployment tax of 0.6% on the first $7,000, per [IRS Publication 15](https://www.irs.gov/publications/p15).
- Social Security stops at $184,500 of 2026 wages or self-employment earnings. The 0.9% Additional Medicare Tax starts at $200,000, or $250,000 filing jointly, per [Form 8959](https://www.irs.gov/forms-pubs/about-form-8959).
- Income tax, under Advanced, is figured at one bracket. The qualified business income deduction is counted while business income stays under $201,750, or $403,500 filing jointly; above that it depends on the type of business and its wages, and the calculator leaves it out of both sides.
- Left out: state income and franchise taxes. The figures are estimates, not tax advice; confirm the election with your tax preparer.

Frequently asked

## S corp tax questions

Depreciation on equipment the S corp buys is in the [MACRS depreciation calculator](/tools/macrs-depreciation-calculator/).

### How much tax does an S corp earning $200,000 pay?

The S corp itself usually pays no federal income tax; its profit passes to the owners' personal returns on Schedule K-1. What changes is payroll tax. With $200,000 of profit and a $100,000 salary, 2026 Social Security, Medicare and federal unemployment tax come to $15,342, against $28,234 of self-employment tax on the same profit as a sole proprietor or single-member LLC. Income tax is owed on the whole $200,000 either way.

### Does an S corp pay less tax than an LLC?

An LLC can choose to be taxed as an S corp, so the comparison is between the two tax treatments. As a single-member LLC, the owner pays self-employment tax on 92.35% of all profit. Taxed as an S corp, payroll tax applies only to the owner's salary, and the rest comes out as distributions without it. Income tax is owed on the whole profit either way, so the saving is in payroll tax, less the cost of running payroll and filing Form 1120-S.

### At what income is an S corp worth it?

When the payroll tax it saves is more than what it costs to run. At a salary of half of profit, the saving is about 6.44% of profit, so every $1,000 a year of payroll service, Form 1120-S preparation and state fees needs roughly $15,500 of profit to cover it. Enter your own quotes in the extra costs field to see where your break-even falls.

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

What the business would pay someone else to do the owner's work, priced role by role from wage surveys for the occupation and area. The IRS sets no figure or percentage; it lists factors such as training, duties, time devoted and what comparable businesses pay. The salary section above gives the method, and [S corp reasonable salary](/blog/s-corp-reasonable-salary/) has the factors and the court case behind them.

### What is the 60/40 or 70/30 rule for S corps?

Splits of profit between salary and distributions that circulate online. The IRS names no percentage. It asks what the business would pay someone else for the work the owner does, and [S corp reasonable salary](/blog/s-corp-reasonable-salary/) covers how to document that number.

### What is the 2% rule for S corps?

It applies to shareholders who own more than 2% of the stock. Their fringe benefits, most often health insurance, go on the W-2 as wages instead of being tax-free, though premiums paid under a qualifying plan stay free of Social Security and Medicare. The steps and entries are in [S corp owner health insurance](/blog/s-corp-owner-health-insurance/).

### Does this calculator include income tax?

Only if you pick a bracket under Advanced. The headline figure compares Social Security, Medicare and federal unemployment tax, which is where the S corp saving comes from. Income tax moves in both directions: the sole proprietor deducts half of self-employment tax, the S corp deducts its share of payroll tax and its running costs, and the salary does not count toward the 20% qualified business income deduction, so a higher salary shrinks it.

### What does an S corp need in its books?

Owner payroll at a reasonable salary, distributions kept apart from wages, an accountable plan for reimbursements and shareholder basis tracked each year. [S corp bookkeeping](/blog/s-corp-bookkeeping/) lists the accounts, and [S corp election bookkeeping](/blog/s-corp-election-bookkeeping/) covers the switch from an LLC.

Updated October 29, 2026