LLC vs S-Corp Tax Calculator
Compare tax outcomes for LLC and S-Corp structures. See how much an S-Corp election could save you.
An LLC vs S-Corp tax calculator helps you determine the income threshold at which electing S-Corp taxation becomes financially worthwhile. By default, single-member LLCs are taxed as sole proprietorships — all net income is subject to the full 15.3% self-employment tax. With an S-Corp election, you split your income into a "reasonable salary" (subject to payroll taxes) and distributions (not subject to SE tax).
The break-even point where S-Corp savings outweigh compliance costs typically falls between $60,000 and $80,000 of net income. The IRS requires that your salary be "reasonable" for your role and industry — generally 40-60% of net income.
How to Use This Calculator
- Step 1 — Enter your projected net business income before entity-level taxes.
- Step 2 — Set a reasonable salary amount — typically 40-60% of net income, based on industry benchmarks.
- Step 3 — Select your state and filing status to compute state-specific tax differences.
- Step 4 — Compare the after-tax take-home for both structures and review whether S-Corp savings exceed compliance costs.
Frequently Asked Questions
When is an S-Corp worth it?
An S-Corp becomes tax-efficient when net income exceeds $60,000-$80,000, saving on SE tax for distributions.
What is a reasonable salary for S-Corp?
Typically 40-60% of net income, based on industry benchmarks and your role.
What are the downsides of an S-Corp?
Payroll processing, quarterly filings, Form 1120S, and compliance costs of $1,500-$3,000/year.
Can an LLC elect S-Corp taxation at any time?
File Form 2553 by March 15 for existing LLCs, or within 75 days of formation for new entities.
Does an S-Corp affect the QBI deduction?
Yes, QBI is calculated only on the distribution portion, which may reduce your deduction.
Data source: IRS 2026 tax brackets, Social Security Administration wage base, and state revenue department publications. Last reviewed: 2026-07-05.