Indiana S-Corp Election Savings Calculator
Indiana has a flat 2.95% state income tax. Set your expected net profit and a reasonable salary to see whether an S-corp election beats staying a sole proprietor or default LLC in Indiana for 2026.
Sole prop / default LLC
Take-home rate 74%
Take-home $88,723 Tax $31,277
Net profit $120,000
Self-employment tax (15.3%) $16,955
Federal income tax $11,506
Indiana income tax $2,815
Take-home pay $88,723
S-corp election
Take-home rate 77%
Take-home $91,908 Tax $28,092
Salary (W-2 wages) $65,000
Distribution (K-1) $48,828
Payroll tax (15.3%) $9,945
Federal income tax $14,064
Indiana income tax $2,883
S-corp admin costs $1,200
Take-home pay $91,908
Electing S-corp status could save you
$3,185 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.