S-Corp vs LLC Tax Calculator

How it is calculated

The tool compares one tax only, the self-employment or payroll tax, and ignores income tax. The combined rate you enter (15.3 = 12.4 Social Security + 2.9 Medicare) is split in those proportions, and Social Security stops at the 2026 wage base of $184,500 while Medicare has no cap: tax(w) = min(w, 184,500) × SS rate + w × Medicare rate.

LLC tax = tax(net income × 0.9235)
S-Corp tax = tax(salary)
distributions = net income − salary
savings = LLC tax − S-Corp tax

Net income is business profit in dollars before paying yourself, and the 0.9235 factor reflects that sole-proprietor tax is charged on 92.35% of profit. The S-Corp side taxes the salary only, at the full combined rate; distributions carry no payroll tax, though they are still income. Net income must be above zero, salary cannot be negative or exceed net income, and a rate above 100 shows no result. Other S-Corp costs such as payroll fees and state rules are not modelled.

Common mistakes

• Setting the salary to zero to show maximum savings. The tool allows it, but a real S-Corp owner has to pay a reasonable wage for the work done, so a zero or very low salary is not a realistic scenario.
• Treating the distributions as tax-free. Only payroll tax is avoided on them; they are still part of your taxable income.
• Entering the revenue instead of net profit. The first field is profit after business expenses, before your own pay.
• Entering the rate as 0.153. The field is a percentage, so it must be 15.3; a decimal is read as 0.153% and shows almost no tax.
• Paying the whole profit as salary and expecting a saving. With salary equal to net income the S-Corp side is taxed on 100% of profit rather than 92.35%, so the savings figure turns negative (for example -$1,404.54 at $120,000).