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S-Corp tax savings calculator

See how an S-Corp election changes the payroll tax on your profit. It’s an estimate from your numbers, not advice; Krystal checks the real picture on a call.

What the S-Corp would pay you. The IRS has no percentage rule; the salary should match what you’d pay someone else to do your job.

How you’re set up today

Estimated payroll-tax difference

Illustrative

$7,424 / year

Before S-Corp running costs.

Savings

About $4,900 a year after running costs

Illustrative: $150k profit, $90k salary, $2,500 running costs, federal payroll tax only. Krystal checks your real numbers on a call.

Comparison

Today · Self-employment tax$21,194
Today · Self-employment tax$21,194On 92.35% of $150,000 profit
S-Corp · Payroll tax$13,770On the full $90,000 salary

Today · Self-employment tax: $21,194

Comparison
ItemValue
Today · Self-employment tax$21,194
S-Corp · Payroll tax$13,770
Payroll tax today and as an S-Corp, by line item
Line itemTodayS-Corp
Earnings taxed$138,525$90,000
Social Security (12.4%)$17,177$11,160
Medicare (2.9%)$4,017$2,610
Distributions, no payroll tax—$60,000
Total$21,194$13,770

Tax year 2026. Social Security applies up to the $184,500 wage base. Self-employment tax applies to 92.35% of profit; payroll tax applies to the full W-2 salary, half paid by you and half by the S-Corp. Results vary. This is not tax advice.

Talk it through with Krystal

Method

How the estimate works.

What the calculator compares

Self-employment tax on all of your profit today, against payroll tax on the salary you’d pay yourself as an S-Corp. Distributions above the salary don’t carry payroll tax.

  • Tax year 2026: Social Security up to the wage base, Medicare on all earnings
  • Self-employment tax on 92.35% of profit; payroll tax on the full W-2 salary
  • 0.9% Additional Medicare Tax over $200,000 single, $250,000 married filing jointly or $125,000 married filing separately
What it leaves out
  • The income tax deduction for half of self-employment tax, and the S-Corp’s deduction for its half of payroll tax.
  • Federal unemployment tax (FUTA) and Texas unemployment tax on the salary.
  • Income tax, the QBI deduction, Texas franchise tax and retirement plan effects.

Krystal covers those on a call.

What counts as a reasonable salary

The IRS has no percentage rule. A reasonable salary is what the business would pay someone else to do your job, based on your duties, hours, industry and DFW market rates. Enter the salary you’d actually pay.

The $2,500 running cost

An assumption, not a quote: an illustrative annual amount for payroll service, the separate S-Corp return and extra bookkeeping. Your costs depend on your setup.

FAQ

S-Corp calculator questions.

How does an S-Corp election save on taxes?

As a sole proprietor or single-member LLC you pay self-employment tax on 92.35% of your net profit: 12.4% Social Security up to the wage base and 2.9% Medicare on all of it. With S-Corp status you pay yourself a reasonable salary, which carries payroll tax, and take the rest as distributions, which don’t. Running costs and the salary decide whether that difference is worth it.

At what income level is an S-Corp worth it?

There’s no single break-even number. It depends on your profit, the salary you can defend and what the S-Corp costs to run. At lower profit, payroll and the extra return can cost more than the payroll-tax difference. Try your numbers in the calculator, then talk it through with Krystal.

What is a "reasonable salary" for an S-Corp owner?

S-Corp owners who work in the business must pay themselves reasonable compensation. The IRS has no percentage rule: a reasonable salary is what the business would pay someone else to do your job, based on your duties, hours, industry and local market rates.

How much can I save with an S-Corp?

It depends on your profit and the salary you can support. Use the calculator for an illustrative estimate; Krystal checks your real numbers on a call.

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