S-Corp Election Savings Calculator
As a sole proprietor or default LLC, all your net profit is subject to 15.3% self-employment tax. Electing S-corp status lets you split profit into a salary (subject to payroll tax) and a distribution (not subject to SE tax) — but adds payroll and filing costs. Set your numbers to see if the math works in your favor for 2026.
Sole prop / default LLC
S-corp election
Electing S-corp status could save you
$3,253 per year
The distribution portion of your profit skips the 15.3% self-employment tax entirely — it's only subject to ordinary income tax. That's the whole S-corp savings mechanism. It's offset by payroll tax on the salary you must pay yourself, plus payroll processing and extra tax-prep costs. The IRS requires "reasonable compensation" for your salary — pay yourself too little relative to your work and distributions, and it can be recharacterized as wages on audit.
S-corp savings by state
State income tax applies the same way to salary and distributions, so state taxes don't change the S-corp math much — but your total numbers still vary by state. Jump to your state: