S Corp vs LLC Taxes Calculator
This free s corp vs llc taxes calculator estimates how much federal self-employment tax you would owe as an LLC versus as an S-corp — and how much an S-corp election could save you each year. Enter your profit and owner salary below; everything recalculates instantly as you type.
Enter your numbers
Total net profit before owner pay — the amount subject to SE tax if you stay an LLC taxed as a sole proprietorship.
The reasonable W-2 salary you would pay yourself as an S-corp. Only this amount is subject to payroll tax; the rest flows through as distributions.
Your results
| LLC self-employment tax (estimate) | $16,955.46 |
|---|---|
| Distributions escaping SE tax | $60,000.00 |
| Effective LLC SE tax rate | 14.13% |
| Effective S-corp payroll tax rate | 7.06% |
Federal estimates only — no federal income tax, state or local taxes included, and the flat 15.3% ignores the annual Social Security wage-base cap. Not tax advice. Confirm your numbers with a CPA or tax professional.
How to use this calculator
Enter your annual net business profit — the same Schedule C number you would use to figure self-employment tax as an LLC. Then enter the owner salary you would pay yourself as an S-corp. The IRS requires this to be a reasonable salary, roughly what you would pay someone else to do your job — you cannot set it to $0.
Everything updates instantly as you type, so try different salary levels to find the trade-off: a lower reasonable salary means bigger SE tax savings, but a higher salary builds more Social Security credits and stays safer with the IRS.
How it works
The core formula is the IRS self-employment tax calculation: self-employment tax = earnings × 0.9235 × 0.153. Only 92.35% of earnings are subject to the tax, and 15.3% is the combined Social Security (12.4%) and Medicare (2.9%) rate. As an LLC taxed as a sole proprietorship, all of your profit is subject to it: $120,000 × 0.9235 × 0.153 = $16,955.46.
As an S-corp, you pay yourself a W-2 salary and only that salary faces Social Security and Medicare taxes: $60,000 × 0.9235 × 0.153 = $8,477.73. The remaining $60,000 flows through to you as a distribution with no SE tax. Your estimated federal savings is the difference: $8,477.73 per year.
What this page compares — and what it does not: this is an entity-structure self-employment tax comparison. That is different from our Freelance Tax Deduction Calculator, which figures deductions on sole-prop/LLC profit, and from our Home Office Deduction Calculator, which covers the simplified home-office deduction. Neither structure changes your federal income tax — both are pass-through — and this estimate ignores income tax, state and local taxes, the Social Security wage-base cap, and S-corp compliance costs (payroll processing, Form 1120-S, state fees). Results are for planning only, not tax advice — consult a CPA before electing S-corp status.
Frequently asked questions
What is the main tax difference between an S-corp and an LLC?
The difference is what gets hit with Social Security and Medicare tax. An LLC taxed as a sole proprietorship pays self-employment tax on the entire net profit. An S-corp owner who works in the business takes a W-2 salary, and only that salary is subject to payroll tax — the remaining profit flows through as a distribution that escapes self-employment tax.
How does this calculator estimate the S-corp savings?
It runs the IRS self-employment tax formula both ways: SE tax = earnings × 0.9235 × 0.153. For $120,000 of profit, an LLC owes $120,000 × 0.9235 × 0.153 = $16,955.46. An S-corp paying a $60,000 owner salary owes $60,000 × 0.9235 × 0.153 = $8,477.73. The estimated federal savings is the difference: $8,477.73 per year.
What is a reasonable salary for an S-corp owner?
The IRS requires S-corp owners who provide services to the business to pay themselves a reasonable salary before taking tax-free distributions — you cannot set your salary to $0 to dodge payroll tax. Reasonable pay is roughly what you would have to pay someone else to do your job, and it varies by role, location, and hours worked. The salary you enter above should reflect a defensible reasonable salary for your situation.
Does an S-corp also save on income tax?
No — this calculator compares self-employment and payroll taxes only. Both an LLC and an S-corp are pass-through entities, so profits are taxed at your personal federal income tax rates either way. Also note that an S-corp brings extra costs this estimate ignores: payroll processing, a separate Form 1120-S return, and state S-corp fees or minimum taxes.
How accurate are these estimates, and should I rely on them alone?
These are federal estimates for planning, not exact tax returns. The calculator uses a flat 15.3% rate and ignores the annual Social Security wage-base cap, federal income tax, and all state and local taxes. Switching entities has legal, payroll, and compliance consequences, so consult a CPA or tax professional before electing S-corp status.