S-Corp Tax Savings Calculator (2026)

As a sole proprietor or single-member LLC, all net profit is subject to 15.3% self-employment tax. As an S-Corp, payroll taxes apply to the salary, and the rest of the profit passes through without them.

The salary has to be reasonable for the work performed. Setting it too low to save tax is one of the first things the IRS looks at with S-Corp owners.

An S-Corp runs payroll, files its own Form 1120-S, and in California pays a 1.5% franchise tax with an $800 minimum. Those costs come out of the savings every year.

Salary paid to yourself doesn't count toward the 20% qualified business income deduction, so a higher salary can shrink that deduction. The calculator accounts for this.

The numbers often start to work once profit is well above what a reasonable salary for the role would be. Below that, the added costs can cancel out most of the savings.

Form 2553 is generally due within 2 months and 15 days after the start of the tax year the election should take effect. Relief for late elections is available in many cases.