S-Corp Strategy
S-Corp Savings Calculator
Enter your annual net profit and filing status to see how much self-employment tax an S-Corp election could save you compared to operating as a sole proprietor.
How this calculator works
Sole proprietor SE tax: 15.3% on 92.35% of net earnings, with the Social Security portion (12.4%) capped at the current Social Security wage base. The Medicare portion (2.9%) applies to all earnings.
S-Corp FICA tax: employer + employee FICA on a "reasonable" W-2 salary set at ~40% of net profit (floored at $40K, capped at $150K). Distributions above the salary are not subject to FICA or SE tax.
Estimated annual savings: the difference between the two. Real-world savings also depend on your state, industry, and what the IRS considers a defensible salary for your role.
Estimates only — not tax, legal, or financial advice. For a personalized analysis, start your free S-Corp evaluation.
What the calculator doesn't account for
- Cost of running payroll (~$50–80/month for Gusto or ADP)
- Cost of preparing the annual Form 1120-S
- State entity-level taxes on S-Corps (CA $800 minimum, NY/NJ/TN entity taxes)
- Additional Medicare Tax (0.9%) on wages above $200K single / $250K MFJ
- QBI deduction interaction (S-Corp salary does not count as QBI)
For most owners netting $90K+, the savings still dwarf these costs by 5–10x. Below ~$50K, the costs and savings tend to cancel. Read S-Corp vs Sole Proprietor for the full break-even analysis.
Ready for the real number?
Our intake collects your last-12-months profit, your role, your state, and any payroll already in place — and gives you a tailored S-Corp recommendation. Start your free evaluation.
Frequently Asked Questions
How does the calculator pick a 'reasonable' salary?
It uses ~40% of net profit, with a $40K floor and a $150K soft cap. That's a conservative starting point — your actual defensible salary depends on your role, hours, and industry comparables.
Why doesn't filing status change the savings number?
Self-employment tax is computed on net earnings before personal income tax, so filing status doesn't affect the SE/FICA portion. Filing status matters for your overall income tax bill, which a real consultation will cover.
What about state taxes?
This estimator covers federal SE/FICA only. Some states (CA, NY, NJ, TN) impose entity-level taxes on S-Corps that can offset some savings.
Keep reading
- S-Corp vs Sole Proprietor — Where the savings start.
- S-Corp vs LLC — When to add the election.
- Reasonable compensation — Set a defensible salary.
- How to elect S-Corp status — File Form 2553 correctly.