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Free tax tool
S-Corp vs. LLC Self-Employment Tax Calculator
See how much you could save in self-employment taxes by electing S-Corp status. Built by former IRS and Treasury agents.
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Annual net profit before SE tax deduction. Max $2,000,000.
IRS requires a 'reasonable compensation' salary. A common rule of thumb is 40%–60% of net profit, but this varies by industry.
Affects the additional 0.9% Medicare threshold.
State taxes not included in this calculation.
Estimated annual SE tax savings
$9,719
After estimated payroll overhead (~$2,250), net benefit ≈ $7,469
At your income level, S-Corp election saves enough to justify the additional overhead.
Side-by-side comparison
LLC / Sole Prop
S-Corp
Gross income$150,000$150,000
Owner salaryN/A$75,000
Distributions$150,000$75,000
SE / payroll tax$21,194$11,475
SE tax deduction$10,597N/A
Employment tax savings—$9,719
LLC (Sole Proprietor)
- Net business income
- $150,000
- SE income (×92.35%)
- $138,525
- Self-employment tax
- $21,194
- SE tax deduction (50%)
- $10,597
S-Corp
- Net business income
- $150,000
- Owner salary
- $75,000
- Distributions (no SE tax)
- $75,000
- Payroll taxes on salary
- $11,475
- Total employment tax
- $11,475
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