S-Corp Tax Savings Calculator
Estimate the self-employment tax you would save by electing S-Corp treatment, net of payroll and compliance costs, based on your net profit and reasonable compensation.
This calculator compares modeled federal employment taxes for a sole proprietor and an S corporation owner performing services. Sole-proprietor self-employment tax generally uses 92.35% of net profit; S corporation payroll taxes apply to wages, including reasonable compensation. The difference is not a flat percentage of distributions. Income tax, QBI, retirement contributions, health benefits and state treatment can also change with the election and are outside this employment-tax comparison.
Run the Numbers
Estimated Result
This comparison assumes one working owner with no other wages or self-employment earnings and, on a joint return, no spouse earnings. It includes both FICA shares and the owner’s Additional Medicare tax liability, not payroll withholding. Additional Medicare tax has no employer matching share. Remaining business profit subtracts employer FICA and entered compliance costs, not employee withholding, and is not a promised distribution or spendable cash. Income tax, QBI, retirement and health-benefit interactions are not modeled. QBI can depend on taxable income, business type, W-2 wages and qualifying property. State taxes, unemployment insurance and other unentered costs are excluded. Negative remaining profit indicates a modeled business loss, not distributable income. Reasonable compensation must be supported independently; this tool does not validate the wage.
Frequently Asked Questions
At what profit does an S-Corp election make sense?
There is no universal profit threshold. A $60,000 to $80,000 profit range is not an eligibility rule or verified break-even benchmark. Compare supportable compensation, employer payroll taxes, added costs, other earnings and income-tax effects before deciding.
What reasonable compensation should I enter?
The amount a comparable business would pay someone else to do what you do, priced from Bureau of Labor Statistics wage data and industry surveys and blended across the roles you actually perform. There is no 60/40 rule and no safe harbor percentage anywhere in the Code or IRS guidance.
Does an S-Corp reduce my income tax?
An S election can change income-tax results through deductible expenses, QBI, retirement contributions and health-benefit treatment. This calculator compares employment taxes only and does not estimate those income-tax effects or total household savings.
Should I put rental property in an S-Corp?
Ordinary real-estate rental income is generally excluded from self-employment tax, but exceptions can apply, including certain service-intensive activities. Do not use this operating-business comparison to choose a rental holding entity. Distributing appreciated property from an S corporation generally triggers corporate-level gain passed through to shareholders; obtain a separate ownership and exit review.
Primary sources and review limits
Model reviewed November 6, 2026. See SSA contribution and benefit bases, IRS self-employment tax guidance, IRS Additional Medicare tax guidance and IRS S corporation compensation and medical-insurance guidance.
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