S-Corp Tax Savings Calculator
Estimate the self-employment tax an S-corp election could save you — and find the profit level where it finally outweighs the extra paperwork.
The IRS requires a reasonable wage for your role before any distribution.
Payroll service plus added bookkeeping and tax prep — usually $1,500–$3,000.
How an S-corp saves on tax
A sole proprietor pays 15.3% self-employment tax on essentially all business profit. An S-corp owner splits profit into two parts: a reasonable salary, which is subject to payroll tax, and a distribution, which is not. The savings is the payroll tax avoided on the distribution — minus the cost of running the S-corp.
The 'reasonable salary' catch
You can't pay yourself $0 and take everything as a distribution. The IRS requires a reasonable salary for the work you do, and an unreasonably low wage is a common audit trigger. The bigger the gap between a defensible salary and your profit, the bigger the savings — but the salary has to hold up.
The overhead that eats into it
An S-corp adds real costs: payroll processing, a separate business return, more bookkeeping, and often state fees or franchise taxes. Typically $1,500–$3,000 a year. Below a certain profit level that overhead cancels the tax savings — which is why this tool also shows your breakeven profit.
Frequently asked
At what income does an S-corp make sense?+
It varies with your reasonable salary and overhead, but many freelancers find an S-corp starts paying off somewhere around $80,000–$100,000 of net profit. The calculator computes your specific breakeven.
Does TaxClover handle S-corp taxes?+
No — TaxClover is built for sole proprietors and single-member LLCs filing a Schedule C. S-corp payroll and returns are out of scope. This calculator is here to tell you when it's time to talk to a CPA about electing one.
Is this calculator a complete S-corp analysis?+
No. It estimates payroll-tax savings only. It doesn't model the QBI deduction interaction, state-level taxes and fees, or retirement-plan effects. Use it as a directional check, then get a full analysis from a tax professional.
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