{
  "id": "s-corp-tax",
  "version": "4ad697f24486",
  "status": "published",
  "name": "S Corp Tax Calculator",
  "question": "How much S corp tax can I save?",
  "summary": "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.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/s-corp-tax-calculator",
  "markdown": "https://www.acalculator.org/finance/s-corp-tax-calculator.md",
  "kind": "function",
  "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).",
  "assumptions": [
    "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 $400 minimum QBI deduction is taken, so results there are rough; the W-2 wage limit and specified service business rules are not included.",
    "State taxes, state unemployment tax, state S corp fees, health insurance, and retirement plan contributions are not included. FUTA assumes the full 5.4% credit."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "profit": {
        "title": "Business profit",
        "description": "Net profit for the year before paying yourself: revenue minus business expenses.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      },
      "salary": {
        "title": "S corp salary",
        "description": "The reasonable salary the S corporation pays you as an employee (W-2 wages).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      },
      "costs": {
        "title": "Extra S corp costs",
        "description": "Yearly costs of running the S corp that a sole proprietor does not have: payroll service, the Form 1120-S return, state fees.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      },
      "status": {
        "title": "Filing status",
        "description": "Your federal filing status.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "mfs",
          "hoh",
          "qss"
        ]
      },
      "other": {
        "title": "Other income",
        "description": "Other taxable income on your return that is not wages: interest, a pension.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000
      }
    }
  },
  "outputs": {
    "savings": {
      "label": "S corp saves",
      "description": "Sole proprietor total minus S corp total; negative when the S corp costs more.",
      "format": "money"
    },
    "soleTotal": {
      "label": "Sole proprietor: total tax",
      "description": "Income tax plus self-employment tax on the whole profit.",
      "format": "money"
    },
    "seTax": {
      "label": "Sole proprietor: self-employment tax",
      "description": "15.3% of 92.35% of profit (12.4% only up to the wage base).",
      "format": "money"
    },
    "soleIncomeTax": {
      "label": "Sole proprietor: income tax",
      "description": "Total tax less self-employment tax.",
      "format": "money"
    },
    "sCorpTotal": {
      "label": "S corp: total tax and costs",
      "description": "Income tax, both halves of Social Security and Medicare on the salary, FUTA, and extra costs.",
      "format": "money"
    },
    "payroll": {
      "label": "S corp: payroll taxes",
      "description": "Employee and employer Social Security and Medicare on the salary, plus FUTA.",
      "format": "money"
    },
    "sCorpIncomeTax": {
      "label": "S corp: income tax",
      "description": "Form 1040 tax on the salary and the pass-through profit (Additional Medicare Tax included).",
      "format": "money"
    },
    "passThrough": {
      "label": "S corp: pass-through profit",
      "description": "Schedule K-1 income: profit less salary, employer payroll taxes, FUTA, and extra costs.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "profit": 100000,
      "salary": 50000,
      "costs": 0,
      "status": "single",
      "other": 0
    },
    "outputs": {
      "savings": 4380.549999999999,
      "soleTotal": 22366.55,
      "seTax": 14129.55,
      "soleIncomeTax": 8237,
      "sCorpTotal": 17986,
      "payroll": 7692,
      "sCorpIncomeTax": 10294,
      "passThrough": 46133
    },
    "text": "On $100,000.00 of profit with a $50,000.00 salary, an S corp saves $4,380.55 of federal tax a year."
  },
  "examples": [
    {
      "given": {
        "profit": 100000,
        "salary": 50000,
        "status": "single"
      },
      "expect": {
        "seTax": 14129.55,
        "soleTotal": 22366.55,
        "passThrough": 46133,
        "sCorpIncomeTax": 10294,
        "payroll": 7692,
        "sCorpTotal": 17986,
        "savings": 4380.55
      },
      "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; hand calculation in content.mdx; Python 3 check in docs/progress/WP-112/check.py"
    },
    {
      "given": {
        "profit": 100000,
        "salary": 50000,
        "costs": 2000,
        "status": "single"
      },
      "expect": {
        "passThrough": 44133
      },
      "source": "Extra costs reduce the pass-through profit and add to the S corp total; Python 3 check in docs/progress/WP-112/check.py"
    },
    {
      "given": {
        "profit": 300000,
        "salary": 120000,
        "status": "mfj"
      },
      "expect": {
        "seTax": 30912.45
      },
      "source": "Schedule SE: 92.35% × 300,000 = 277,050; 12.4% × 184,500 + 2.9% × 277,050 (wage base $184,500, Pub 15 2026); Python 3 check in docs/progress/WP-112/check.py"
    }
  ],
  "sources": [
    "IRS, S corporation compensation and medical insurance issues (reasonable compensation). https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues (retrieved 2026-10-05)",
    "IRS, Publication 15 (2026), Employer’s Tax Guide: Social Security and Medicare rates, wage base $184,500, and FUTA. https://www.irs.gov/publications/p15 (retrieved 2026-10-05)",
    "IRS, Instructions for Form 940 (FUTA: 6.0% on the first $7,000, up to 5.4% credit). https://www.irs.gov/instructions/i940 (retrieved 2026-10-05)",
    "IRS, Instructions for Schedule SE (Form 1040). https://www.irs.gov/instructions/i1040sse (retrieved 2026-10-05)",
    "IRS, Instructions for Form 8995, Qualified Business Income Deduction Simplified Computation. https://www.irs.gov/instructions/i8995 (retrieved 2026-10-05)"
  ],
  "related": [
    "self-employment-tax",
    "payroll-tax",
    "income-tax",
    "business-valuation"
  ],
  "changelog": []
}