LLC vs S-Corp Tax Calculator (2026): See Your Break-Even Income
Free. Non-gated. 2026 rates. Enter your net profit, state, and planned salary to see exactly how much you save by electing S-Corp status versus staying LLC default.
What This Calculator Assumes
| Assumption | Default Value | Source |
|---|---|---|
| SS wage base | $175,800 | SSA 2026 (projected) |
| SE tax rate | 15.3% (SS) + 2.9% (Medicare-only above base) | IRS Pub 15 2026 |
| QBI deduction | 20% of eligible income (simplified; no SSTB phase-out) | IRC Section 199A |
| Federal brackets | 2026 single and MFJ (inflation-adjusted) | IRS Rev Proc 2025 inflation adjustments |
| Standard deduction | $15,000 single / $30,000 MFJ | IRS 2026 inflation adjustments |
| State income tax | State top marginal rate (approximation) | State DOR April 2026 |
| Default compliance cost | $2,400/yr | CPA fee survey + Gusto/OnPay pricing |
| CA entity tax | $800 minimum + 1.5% net income | CA FTB S-Corp tax rules |
This calculator is a simplified model for illustrative purposes. It does not model all deductions, credits, NIIT, SSTB phase-out, or multi-state scenarios. For filing decisions, consult a qualified CPA or Enrolled Agent. Tax guidance is general. Confirm state rules and specifics with a CPA or EA. Data verified April 2026.
Why the Break-Even Is $40,000-$60,000
The break-even formula is simple: SE tax saved must exceed the compliance cost you add by electing S-Corp. Here is the math.
If your reasonable salary is $50,000 and your compliance cost is $2,400 per year, the S-election only saves you money on the distribution above $50,000. That distribution saves 15.3% in SE tax. So: $2,400 cost / 0.153 rate = $15,686 of distribution needed to cover compliance. Add that to your $50,000 salary and your break-even is approximately $65,686 net profit.
The range is $40k-$60k because: lower reasonable salaries shift break-even down; higher compliance costs shift it up. In California, add $800-$2,700 in state entity tax and the break-even jumps to $80,000-$90,000. In Texas or Florida with minimal compliance cost, break-even can be as low as $45,000.
Calculator FAQ
Why is my salary taxed at 15.3% just like SE tax?
The S-Corp does not eliminate FICA on your salary. It eliminates SE tax on distributions above your salary. Your reasonable salary is still subject to FICA at 15.3% (7.65% employer + 7.65% employee). The savings come from the portion of net profit you take as distributions above that salary - distributions escape both SE tax and FICA entirely.
Does the QBI deduction affect results?
Yes. Under LLC default, your full net profit may be QBI-eligible. Under S-Corp, only your K-1 distribution is QBI-eligible - your salary is not. For high-income SSTB service owners (income above $191,950 single or $383,900 MFJ), the S-election can reduce your QBI deduction, partially offsetting SE tax savings. Run both scenarios carefully in the SSTB phase-out range.
Does California wipe out the S-Corp tax savings?
For many California LLCs, yes. California imposes a 1.5% entity-level S-Corp franchise tax plus an $800 minimum. On $80,000 net profit that adds $2,000 in state-level costs. The break-even in California shifts to approximately $90,000 net profit. The calculator applies CA's 1.5% rule automatically when you select California.
What does the $2,400 default compliance cost include?
The default $2,400 is a conservative estimate: $480-$800 for payroll service (Gusto or OnPay for one person), $1,200-$1,600 for 1120-S preparation, and $0-$400 for state S-Corp filings. Edit the compliance cost input to reflect your actual costs. See /compliance-costs for a full breakdown.
Can I run this for mid-year?
Yes, annualise your figures. If you have $60,000 net profit through June, use $120,000 for the full year. The compliance cost for a partial year is the same as a full year - payroll setup, W-2 issuance, and 1120-S preparation are all required regardless of when you elected.
What about solo 401(k) contributions?
The calculator does not model retirement plan differences. Under LLC default, solo 401(k) employer contributions are based on net SE income. Under S-Corp, employer contributions are 25% of W-2 wages. At a low reasonable salary, S-Corp may restrict your total retirement contribution vs LLC default. See the compliance-costs page for the full comparison.
What if I have employees?
This calculator assumes a single-owner LLC. If you have employees, FICA applies to all employee wages regardless of S-Corp or LLC status. The S-Corp saves you SE tax only on distributions to the owner above your salary. The compliance cost will be higher with employees (more complex payroll, potentially higher 1120-S prep fees).