LLC vs S-Corp Tax Savings Calculator

Compare LLC self-employment tax vs S-Corp payroll tax to find your ideal business structure. Enter your net profit and reasonable salary to calculate annual tax savings.

Mathematical Audit

LLC vs S-Corp Tax Formula

The calculator compares self-employment (SE) tax on all LLC profit versus FICA payroll tax on a reasonable S-Corp salary only.

LLC SE Tax = Net Profit × 0.9235 × 15.3% (up to $168,600) + excess × 2.9%
S-Corp Payroll Tax = Reasonable Salary × 15.3% (employer + employee combined)
S-Corp Annual Tax Savings = LLC SE Tax − S-Corp Payroll Tax − Admin Costs

The Social Security wage base for 2025 is $176,100. S-Corp owners must pay themselves a 'reasonable salary' per IRS guidelines. Admin costs include payroll processing and additional state filings.

Operational Guide

How to Use the LLC vs S-Corp Tax Savings Calculator

1

Enter your annual net business profit

This is gross revenue minus deductible business expenses, before paying yourself.

2

Set a reasonable S-Corp salary

The IRS requires S-Corp owners to pay themselves a market-rate salary. A common rule of thumb is 40–60% of net profit.

3

Input estimated S-Corp admin costs

S-Corp status adds costs: payroll service ($500–$2,000/yr), extra state fees, and CPA fees. Enter your estimated total.

4

Review your annual tax savings

The calculator shows your LLC SE tax, S-Corp payroll tax, and net savings after admin overhead.

Real-World Scenario Example

"A freelance consultant with $150,000 net profit pays themselves a $75,000 salary as an S-Corp."

Inputs

netProfit:150000
reasonableSalary:75000
adminCosts:2000

Result

LLC SE Tax ≈ $21,237 vs S-Corp Payroll Tax ≈ $11,475 → Annual savings of approximately $7,762 after $2,000 admin costs.

Important Disclaimer

This calculator provides estimates for educational purposes only. Consult a licensed CPA or tax professional before making business entity decisions. Tax laws change annually.

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Sources & References

IRS S Corporations — Tax Center

https://www.irs.gov/businesses/small-businesses-self-employed/s-corporations

IRS Self-Employment Tax (SE Tax)

https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes