Would S-corp taxation save your business money?
Compare estimated tax savings with salary, payroll, and filing costs. For single-member LLC owners, freelancers, and consultants weighing an S-corp election.
- Estimated net savings
- Self-employment tax you'd avoid, less S‑corp overhead.
- A market-based salary range
- Built from wage data and the reasonable-compensation factors the IRS lists.
- The trade-offs
- State taxes, admin costs, and the assumptions behind your number.
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Who this is for
The S-corp math works the same way for most one-person businesses. This calculator is built for:
- Freelancers
- Designers, developers, writers, and other solo pros with steady 1099 income.
- Consultants
- Independent advisors billing clients directly, not through an employer.
- Single-member LLCs
- Already formed an LLC and taxed as a sole proprietor by default.
- Owner-operated service businesses
- One-person shops where the profit is mostly your own labor.
It's not built for multi-owner partnerships, C-corps, or businesses where most of the profit comes from employees or capital rather than your own work. And the election only helps if you run payroll correctly. It's not a set-and-forget move.
When it pays off, and when it doesn't
It hinges on your salary, not just your profit. An election starts to pay once your profit clears a reasonable salary by enough to cover annual admin and any incremental state entity cost. Because that salary depends on your occupation's market rate, the threshold differs by trade. The three breakeven estimates below assume a single filer in Colorado who is currently taxed as a sole proprietor (including a default-taxed single-member LLC). They're illustrations, not rules.
When is it not worth it? Usually when a reasonable salary consumes most of the profit, or the remaining payroll-tax savings can't cover the added costs. See the full S-corp breakeven examples before treating any profit target as a rule.
Photographer
BLS median salary used $45,000
Breakeven in our model: $73,000 profit
A lower market salary leaves more to take as distributions, so the election clears its costs sooner.
Accountant
BLS median salary used $84,000
Breakeven in our model: $134,000 profit
A higher salary means you need more profit before distributions cover the overhead.
Software developer
BLS median salary used $136,000
Breakeven in our model: $354,000 profit
A high market salary leaves little to distribute, and that salary isn't QBI-eligible.
Sources and update date
Updated . Federal savings parameters checked against IRS and SSA sources November 6, 2026. Choose 2026 (default) or 2027 federal figures; wage data remains May 2025 BLS. The separate Solo 401(k) planner uses verified 2026 limits only. State entity costs use 2025 research with the LLC comparison checked July 2026; confirm current state costs before electing.
- IRS Revenue Procedure 2026-35: 2027 income-tax and QBI parameters
- IRS Revenue Procedure 2025-32: 2026 income-tax and QBI parameters
- SSA Social Security contribution and benefit bases
- IRS S-corporation compensation guidance
- BLS Occupational Employment and Wage Statistics
- Full methodology, state-data limits, and review status