acalculator

How much S corp tax can I save?

Type your business profit and the salary your S corporation would pay you. The answer compares your 2026 federal taxes as a sole proprietor and as an S corp owner.

Your numbers

The IRS expects pay comparable to what others are paid for similar work.
S corp saves
$4,380.55

On $100,000.00 of profit with a $50,000.00 salary, an S corp saves $4,380.55 of federal tax a year.

Sole proprietor: total tax
$22,366.55
Sole proprietor: self-employment tax
$14,129.55
Sole proprietor: income tax
$8,237.00
S corp: total tax and costs
$17,986.00
S corp: payroll taxes
$7,692.00
S corp: income tax
$10,294.00
S corp: pass-through profit
$46,133.00

S corp saves: $4,380.55. On $100,000.00 of profit with a $50,000.00 salary, an S corp saves $4,380.55 of federal tax a year.

S corp saves by s corp salary

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Compares the 2026 federal tax of a sole proprietor or single-member LLC with an S corporation that pays the owner a reasonable salary: self-employment tax, payroll taxes, income tax, and the savings.

Example with the default inputs (Business profit $100,000.00, S corp salary $50,000.00, Extra S corp costs $0.00, Filing status Single, Other income $0.00): On $100,000.00 of profit with a $50,000.00 salary, an S corp saves $4,380.55 of federal tax a year.

Method: Sole proprietor: Form 1040 with the profit on Schedule C: self-employment tax 15.3% of 92.35% of profit (Social Security part only up to $184,500), half of it deducted, the 20% QBI deduction, the standard deduction. S corp: employer and employee each pay 6.2% (to $184,500) and 1.45% of the salary; FUTA 0.6% of the first $7,000; pass-through profit = profit − salary − employer payroll taxes − FUTA − extra costs, which is qualified business income; Form 1040 with the salary as wages and the pass-through profit. Savings = sole proprietor total − (S corp income tax + payroll taxes + extra costs).

  • An estimate for tax year 2026 (IRS Rev. Proc. 2025-32, Publication 15), not tax or legal advice.
  • The standard deduction, no children (the earned income credit without children applies at low incomes), one owner. Above the QBI threshold ($201,750 single, $403,500 jointly of taxable income) only the $400 minimum QBI deduction is taken, so results there are rough; the W-2 wage limit and specified service business rules are not included.
  • State taxes, state unemployment tax, state S corp fees, health insurance, and retirement plan contributions are not included. FUTA assumes the full 5.4% credit.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Business profit $100,000.00, S corp salary $50,000.00, Filing status Single gives Sole proprietor: self-employment tax $14,129.55, Sole proprietor: total tax $22,366.55, S corp: pass-through profit $46,133.00, S corp: income tax $10,294.00, S corp: payroll taxes $7,692.00, S corp: total tax and costs $17,986.00, S corp saves $4,380.55.Source: Schedule SE (92.35%, 15.3%), Form 8995 (20% QBI), Pub 15 (2026) 7.65% each side and FUTA 0.6% of $7,000
  2. Business profit $100,000.00, S corp salary $50,000.00, Extra S corp costs $2,000.00, Filing status Single gives S corp: pass-through profit $44,133.00.
  3. Business profit $300,000.00, S corp salary $120,000.00, Filing status Married filing jointly gives Sole proprietor: self-employment tax $30,912.45.

How it works

Sole proprietor (Schedule C).

  1. Net earnings = 92.35% × profit. Self-employment tax = 12.4% × the lesser of net earnings and $184,500, plus 2.9% × net earnings (none under $400 of net earnings).
  2. AGI = profit + other income − half the self-employment tax.
  3. Qualified business income = profit − half the self-employment tax. QBI deduction (Form 8995) = the lesser of 20% × QBI and 20% × (AGI − standard deduction), with the $400 minimum when QBI is at least $1,000; above the threshold only the minimum.
  4. Taxable income = AGI − standard deduction − QBI deduction. Income tax by the Tax Table below $100,000 (the rate schedule at the middle of the $50 row, rounded to whole dollars) or the rate schedule above, plus the 0.9% Additional Medicare Tax on net earnings over $200,000 ($250,000 jointly, $125,000 separately).
  5. Total = income tax + self-employment tax, less the earned income credit if any.

S corporation.

  1. Payroll taxes on the salary, each side: 6.2% × the lesser of the salary and $184,500, plus 1.45% × the salary. FUTA = 0.6% × the lesser of the salary and $7,000.
  2. Pass-through profit = profit − salary − employer payroll taxes − FUTA − extra costs (no answer if below 0). It is qualified business income.
  3. Form 1040 with the salary as wages and the pass-through profit plus other income as other income: AGI, the QBI deduction on the pass-through profit, taxable income, tax as above, plus Additional Medicare Tax on wages over the threshold.
  4. Total = that income tax + both sides of the payroll taxes + FUTA + extra costs.

S corp saves = sole proprietor total − S corp total. Both use the standard deduction ($16,100 single or separately, $32,200 jointly or surviving spouse, $24,150 head of household).

When the data is out of date

The wage base and the brackets change each year. After 2026 the page keeps using the 2026 rates and says so above the result.

Worked examples by hand

Single, $100,000 of profit, a $50,000 salary.

Sole proprietor: net earnings 92,350; self-employment tax 15.3% × 92,350 = $14,129.55; AGI 100,000 − 7,064.78 = $92,935.23. QBI deduction: the lesser of 20% × 92,935.23 = 18,587.05 and 20% × (92,935.23 − 16,100) = 15,367.05. Taxable income $61,468.18, Tax Table row middle $61,475: 1,240 + 4,560 + 22% × 11,075 = 8,236.50, so $8,237. Total $22,366.55.

S corp: payroll 7.65% × 50,000 = $3,825 each side; FUTA 0.6% × 7,000 = $42. Pass-through profit 100,000 − 50,000 − 3,825 − 42 = $46,133. AGI $96,133; QBI deduction the lesser of 20% × 46,133 = 9,226.60 and 20% × 80,033 = 16,006.60. Taxable income $70,806.40, row middle $70,825: 1,240 + 4,560 + 22% × 20,425 = 10,293.50, so $10,294. Total 10,294 + 3,825 + 3,825 + 42 = $17,986.

S corp saves $4,380.55.

Other questions people ask

How does an S corp save tax?

A sole proprietor (or single-member LLC) pays 15.3% self-employment tax on almost all profit. An S corp owner who works in the business is an employee: Social Security and Medicare (7.65% from the company and 7.65% from you) are paid only on the salary. The rest of the profit passes through without those taxes.

How much salary do I have to pay myself?

A reasonable salary: about what the business would pay someone else for the same work. The IRS can treat distributions as wages when the salary is too low, and then charge the payroll taxes with penalties.

When is an S corp worth it?

When the profit above a reasonable salary is large enough that the payroll tax saved is more than the extra costs: running payroll, a separate Form 1120-S return, and state fees. Type your own costs to see where that point is for you.

Does an S corp change the QBI deduction?

Yes. The 20% qualified business income deduction is on the pass-through profit only, not on your salary, so a higher salary lowers it. This calculator includes that below the QBI threshold ($201,750 single, $403,500 jointly of taxable income in 2026).

Why can the S corp cost more?

At low profit, or with a salary close to the profit, the payroll taxes are about the same as self-employment tax, while the QBI deduction is smaller and the extra costs remain. The result then shows a negative saving.

What happens above the Social Security wage base?

The 12.4% Social Security part stops at $184,500 of wages and self-employment earnings in 2026. Above that, only the 2.9% Medicare part (and 0.9% Additional Medicare Tax) applies either way, so the saving per extra dollar of profit gets smaller.