How does the S-corp calculator work?
As a sole proprietor or single-member LLC, you pay self-employment tax of 15.3% on 92.35% of your net profit: 12.4% for Social Security up to the wage base ($184,500 for 2026) and 2.9% for Medicare with no cap.
With an S-corp election, you pay yourself a salary through payroll and take the rest of the profit as distributions. Payroll taxes apply to the salary; the distributions skip Social Security and Medicare tax. The calculator compares the two:
- Self-employment tax on your profit today.
- Minus payroll tax on an assumed salary of 50% of profit.
- Minus about $1,500 a year for payroll and the extra business tax return.
- Rounded down to the nearest $50, so it never looks more precise than it is.
Example: $100,000 of profit
A hypothetical single-owner business, before income-tax effects and state taxes:
| Sole prop / LLC | S-corp | |
|---|---|---|
| Self-employment or payroll tax | $14,130 | $7,650 (on a $50,000 salary) |
| Added payroll and compliance cost | none | about $1,500 |
| Estimated yearly savings | about $4,950 |
What the estimate leaves out
- Income-tax effects. The deduction for half of self-employment tax, the company's deduction for its share of payroll tax, and the qualified business income deduction all change with the election.
- State taxes and fees. Some states tax S-corps at the entity level or don't recognize the election.
- Your real salary. A defensible salary for your role may be higher than 50% of profit, which shrinks the savings.
- Additional Medicare tax and Social Security credits. High earners owe an extra 0.9% Medicare tax, and a lower salary means lower Social Security earnings on your record.
When an S-corp probably isn’t worth it
- Your profit is under about $50,000, or swings a lot from year to year.
- You plan to close or sell the business soon.
- You already earn above the Social Security wage base from a W-2 job, so only the Medicare part is saved.
- Your state taxes S-corps heavily or doesn't recognize the election.
What to do with your number
Want S-corp tax treatment for 2027? The election is generally due by March 15, 2027. Read LLC vs S-corp: when the election saves you money for the full picture, including how a reasonable salary is set. Or book a free 15-minute call and a CPA-backed team will run your actual numbers and tell you whether electing is worth it.
General information, not tax advice for your situation. See our editorial policy.