S Corp Tax Savings Calculator (2026)
Enter your profit and a reasonable salary to see whether an S corp election would lower your total tax in 2026, after the cost of running payroll and filing a separate return.
Probably not worth it on its own. Weigh it against the extra filings, running payroll and the reasonable-salary rules.
| Breakdown | Default LLC | S corp |
|---|---|---|
| Self-employment / payroll tax | $16,955 | $9,180 |
| Additional Medicare tax | $0 | $0 |
| QBI deduction | $19,084 | $10,482 |
| Federal income tax | $11,506 | $13,594 |
| State income tax (est.) | $3,817 | $4,291 |
| Added S corp costs | — | $3,000 |
| Total | $32,279 | $30,066 |
- A lower salary means lower Social Security credits, and a smaller retirement benefit later.
- S corp retirement contributions are based on salary only: 25% of W-2 pay, versus about 20% of your profit (after half of self-employment tax) as a sole proprietor.
- The IRS can recharacterize distributions as wages if your salary is below what the role would pay someone else.
- Some states tax S corps directly or don't recognize them, such as California (1.5%, $800 minimum) and New York City.
2026 federal figures: standard deduction, Social Security wage base $184,500, §199A thresholds and phase-ins. Added costs are treated as deductible business expenses. State tax is a flat estimate on taxable income. Doesn't model itemized deductions, credits or retirement contributions. Educational estimate, not tax advice.
What the calculator does.
- Default LLC: self-employment tax at 15.3% on 92.35% of profit up to the $184,500 wage base, then income tax after half of SE tax, the standard deduction and QBI.
- S corp: employer and employee FICA on your salary, income tax on salary plus distributions, and QBI on distributions with your salary counting toward the W-2 wage limit.
- Both sides apply the 2026 §199A thresholds ($201,750 single, $403,500 joint) and phase-in ranges, including the specified service business rules.
Common questions
What salary should I enter?
A reasonable salary for the work you do: what you'd pay someone else for the same role. Many owners start from salary survey data. Entering an unrealistically low salary will overstate the savings.
Why does the answer change so much above $200,000?
Above the §199A threshold, the QBI deduction is limited to 50% of W-2 wages paid. A sole proprietor with no employees can lose it, while an S corp owner's own salary counts as wages.
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