S-Corp Tax Savings Calculator
Find out how much you could save by electing S-Corp status. Enter your business profit and filing details to compare sole proprietorship vs. S-Corp tax liability — including FICA savings, reasonable salary split, and break-even analysis. Uses 2025 federal tax brackets.
Common S-Corp Tax Questions
How does an S-Corp save me money on taxes?
As a sole proprietor, you pay self-employment tax (15.3%) on all your business profit. With an S-Corp, you pay yourself a reasonable salary and take the rest as distributions. You only pay FICA taxes on the salary portion — not on distributions. This can save thousands per year depending on your profit level.
What is a reasonable salary for an S-Corp?
The IRS requires S-Corp owners to pay themselves a "reasonable salary" before taking distributions. This is typically based on what someone in a similar role and industry would earn. A common starting point is 50–60% of business profit, but it varies by industry, experience, and location.
When does it make sense to elect S-Corp status?
S-Corp election generally makes sense when your business profit consistently exceeds $50,000–$60,000 per year. Below that, the additional costs of S-Corp compliance (payroll, separate tax return, bookkeeping) may outweigh the savings.
Can an LLC be taxed as an S-Corp?
Yes. An existing LLC can elect S-Corp tax treatment by filing IRS Form 2553. You get the liability protection of an LLC with the tax benefits of an S-Corp. The election must be filed by March 15 of the tax year.
What are the additional costs of running an S-Corp?
S-Corps require payroll processing, a separate corporate tax return (Form 1120-S), and more detailed bookkeeping. These costs typically run $2,000–$5,000 per year. Our calculator factors these into the break-even analysis.
Ready to maximize your tax savings?
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