This S corp tax calculator estimates how much self-employment and payroll tax an owner-run LLC could save by electing S corporation status in 2026. It is built for single-owner businesses and freelancers who already earn a steady profit and want a realistic number before filing Form 2553.
How to use the calculator
- Net business profit (before owner pay): revenue minus business expenses for the year, before you pay yourself anything.
- Reasonable salary you would pay yourself: what you would pay someone else to do your job. The IRS sets no fixed percentage.
- Extra yearly cost of running an S-Corp: payroll service, the separate 1120-S return, state minimum tax and fees. Use your own quotes.
The result updates as you type. If the salary you enter plus the employer’s share of payroll tax would be more than your profit, the calculator lowers the salary and tells you.
How it is calculated
The calculator compares two totals for the same profit.
As an LLC or sole proprietor. Self-employment tax follows Schedule SE: 92.35% of net profit counts as net earnings, Social Security is 12.4% of those earnings up to the 2026 wage base of $184,500, and Medicare is 2.9% with no cap. Below $400 of net earnings there is no self-employment tax. Sources: SSA contribution and benefit base, IRS Topic 751 and the Schedule SE instructions.
As an S-Corp. Only the salary carries payroll tax: 7.65% from you and 7.65% from the company (Social Security again capped at $184,500). Federal unemployment tax (FUTA) adds 0.6% on the first $7,000 of wages after the full state credit, which is $42 a year (Form 940 instructions). Then your extra running costs are added.
Savings = self-employment tax as an LLC − (payroll taxes + FUTA + extra costs).
Worked example with the default inputs
| Line | Amount |
|---|---|
| Net profit | $120,000 |
| Self-employment tax as an LLC ($120,000 × 92.35% = $110,820, taxed at 15.3%) | $16,955.46 |
| Payroll taxes on a $60,000 salary (both halves, 15.3%) | $9,180.00 |
| FUTA ($7,000 × 0.6%) | $42.00 |
| Extra S-Corp running costs | $2,000.00 |
| Total as an S-Corp | $11,222.00 |
| Estimated yearly savings | $5,733 |
What this calculator leaves out
- Income tax. The profit is taxed on your personal return either way. Two things shift: the deduction for half of self-employment tax disappears, and the 20% qualified business income (QBI) deduction can shrink because your salary no longer counts as business income. The net effect can go in either direction.
- The 0.9% Additional Medicare Tax on high earnings.
- State payroll taxes on your salary. In New Jersey that includes unemployment, disability and family leave contributions. New Jersey S corporations also pay a yearly minimum tax; put it in the extra-cost field.
- Retirement and benefits. A lower salary can mean smaller retirement plan contributions and lower earnings credited for future Social Security benefits.
- Whether your salary holds up. The calculator uses the number you enter. The IRS looks at your duties, time and what comparable businesses pay (IRS guidance on S corporation officer pay).
LLC vs S-Corp: when the election pays off
The saving comes from profit above your salary, so the same election can help one owner and hurt another. For the full comparison, including New Jersey rules, read LLC vs S corp. Here is what the calculator shows at four profit levels, each with $2,000 of extra running costs. The salaries are illustrations, not recommendations.
| Net profit | Salary | Self-employment tax as LLC | Total as S-Corp | Result |
|---|---|---|---|---|
| $40,000 | $30,000 | $5,651.82 | $6,632.00 | Costs $980 more |
| $60,000 | $35,000 | $8,477.73 | $7,397.00 | Saves $1,081 |
| $120,000 | $60,000 | $16,955.46 | $11,222.00 | Saves $5,733 |
| $200,000 | $90,000 | $28,234.30 | $15,812.00 | Saves $12,422 |
Three patterns stand out. At low profit the fixed costs win and the election loses money. In the middle range the saving grows quickly. Near the top it flattens: once net earnings pass the $184,500 wage base, an LLC owner stops paying the 12.4% Social Security part too, so extra profit saves only the 2.9% Medicare part. At $250,000 of profit with a $100,000 salary, the calculator shows $12,231, slightly less than the $200,000 case.
The election is also a poor fit when profit swings a lot from year to year, when you are not ready to run payroll every month, or when an owner lives outside the U.S. and is not a U.S. citizen or resident, because S corporations cannot have nonresident alien shareholders.
Getting the election and the salary right
If your numbers point toward an S-Corp, the next steps are an eligibility check, Form 2553 filed on time and a payroll setup that pays you a salary you can defend. Our S corp election service covers all three, and tax planning is where we test the salary against your full return, income tax included. You can also compare other scenarios with the rest of our free tax calculators. If you would like a second look at your numbers, book a free 15 to 30 minute consultation.