Free tool
S-corp savings calculator
Does the election beat its costs?
Your result is an estimate based on the answers you enter. It is not filed or stored anywhere.
Method
How this calculator works
An S-corp election saves money one way: profit paid out as distributions (above your reasonable salary) escapes the 15.3% self-employment tax. The salary itself still pays full payroll tax, and the IRS requires that salary to be reasonable for your work — not a token number.
The election also creates real costs: payroll software, a separate business tax return (1120-S), usually heavier bookkeeping, and in some states extra fees. This calculator nets the payroll-tax savings against those costs at your numbers. The usual break-even lands around $60,000–$100,000 of profit, but your salary assumption drives everything — read the reasonable-salary guide before acting.
Estimates, not advice
Every figure this tool produces is a planning estimate built from the numbers you enter and simplified assumptions documented above. It is educational content, not individualized financial, legal, or tax advice. Rates, limits, and thresholds change — annual constants are reviewed each January, and you should confirm anything decision-critical against primary sources or a professional.
Questions
FAQ
What is a "reasonable salary"?
What you'd pay someone else to do your job — supported by market data. The 60/40 rule of thumb is not law; documentation of comparable pay is what defends the number.
Does this affect my QBI deduction?
It can — your S-corp salary isn't QBI, which slightly offsets savings for some. That nuance is beyond this tool; a CPA should run the full comparison before you elect.
When would I make the election?
Form 2553, generally within 2 months and 15 days of the start of the tax year it should apply to — late-election relief exists. See the walkthrough guide.