Sole Proprietor vs S-Corp Tax Calculator
Use the calculator to do the math and see if you can save some moolah by becoming an S-Corp. Full article here, breaking down the benefits and the pain points of being an S-Corp.
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Sole Proprietor vs S-Corp Calculator
Whether electing S-corp status actually saves you money, after payroll service and the extra return. 2026 numbers.
What this calculator assumes
- 2026 brackets and the $16,100 / $32,200 / $24,150 standard deduction from IRS Rev. Proc. 2025-32, plus the $184,500 Social Security wage base announced by SSA.
- Self-employment tax is 15.3% on 92.35% of profit up to the wage base, then 2.9% Medicare with no ceiling. The extra 0.9% Medicare tax applies above $200,000, or $250,000 filing jointly.
- The income tax line is the part most S-corp calculators skip. It captures the 20% pass-through deduction under the 2026 rules: thresholds of $201,750 single and $403,500 joint, the widened $75,000 / $150,000 phase-in ranges, the 50%-of-W-2-wages limit, and the new $400 floor. The alternative limit of 25% of wages plus 2.5% of qualified property is not modeled, which slightly understates the sole-proprietor side for anyone with a lot of gear or property still depreciating. Your salary counts as W-2 wages, which can rescue a deduction a sole proprietor would lose entirely.
- You take the standard deduction, with no capital gains, credits, or dependents in the picture.
- State figures for California, Illinois, DC and Tennessee are calculated from your own numbers and verified against those states' own tax authorities. States marked "worth checking" are ones I would rather flag than guess at — confirm with your state's revenue department and type the amount in.
- State personal income tax is left out on purpose. It lands within a few hundred dollars of the same under both structures, so it barely moves the comparison. Entity-level state taxes are a different animal, which is what the state selector is for.
- Retirement contributions and self-employed health insurance are left out. Both move the answer, and both work differently under the two structures.
- Your salary is also what your Social Security benefit and your Solo 401(k) employer contribution are built on. Shrinking it shrinks both.
An estimate for education, not tax advice. Run your own numbers past a CPA before you make any decisions.
Sources. 2026 brackets and standard deduction: IRS Rev. Proc. 2025-32. Social Security wage base: SSA. Section 199A as amended by the One Big Beautiful Bill Act §70105 — phase-in ranges of $75,000 single and $150,000 joint, and the new §199A(i) minimum deduction of $400 where QBI is at least $1,000. Overall limitation of 20% of taxable income before the deduction, per the Form 8995 instructions. QBI reduced by the deductible half of self-employment tax, per Reg. §1.199A-3(b)(1)(vi). State figures: California FTB, Illinois DOR, DC OTR, Tennessee Dept. of Revenue.
The "should I be an S-Corp" question comes up constantly with freelancers and self-employed. So I built a calculator to settle it — here's the real tradeoff between paying 15.3% self-employment tax on everything you make versus running payroll and filing two tax returns.