S-Corp Tax Savings Calculator

See how much you could save in self-employment taxes with an S-Corp election.

Your details

This is your estimated annual business profit after expenses, before any salary or taxes. If you're a freelancer or sole proprietor, it’s the amount you’d report as net income on your tax return.

Enter a fair market salary you’d pay yourself for the work you do. The IRS requires S-Corp owners to take a ‘reasonable’ salary before taking distributions.

This is the portion of your income paid to you as an S-Corp distribution—it's not subject to self-employment tax. Total income = Salary + Distribution.

Estimated Tax Savings

$15,300
Explanation:
As a sole proprietor, all of your income $200,000 is subject to the 15.3% self employment tax, which would cost you about $30,600
As an S Corporation, you pay yourself a $100,000 salary which is still taxed at 15.3% $15,300
The rest $100,000 is considered a distribution, and not subject to self-employment tax, saving you $15,300

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Keeper Staff

Keeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.

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Reviewed by
a tax professional
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Reviewed by
a tax professional

This content has been reviewed by an Enrolled Agent (EA) with the IRS — the highest credential awarded by the agency. Enrolled Agents are empowered to represent all taxpayers before the IRS, on all types of tax-related matters. Accountants who earn this certification have passed a comprehensive three-part exam on individual and business tax returns. To maintain EA status, they must stay up to date in the field by completing 72 hours of continuing education every three years.

How to Calculate Your S-Corp Tax Savings

Electing to be taxed as an S-Corporation (S-Corp) can help self-employed people reduce their tax bill, especially when it comes to self-employment taxes. Here's a step-by-step guide on how S-Corp tax savings work and how to calculate your potential benefit.

Step-by-step example

1. Calculate your net income
This is your business profit — your total revenue minus your business expenses.

For example: Net income = $100,000.

2. Estimate your self-employment tax as a sole proprietor

If you're taxed as a sole proprietor or single-member LLC, you’ll pay self-employment tax (15.3%) on your entire net income.

Example: $100,000 × 15.3% = $15,300 in self-employment tax.

3. Set a reasonable salary

When you're taxed as an S-Corp, the IRS requires you to pay yourself a reasonable salary. Make sure to set a defensible salary; otherwise you risk an audit by the IRS. That salary is subject to the same 15.3% payroll tax, but any remaining profit is not — it’s considered a distribution and avoids self-employment tax.

For example: Reasonable salary = $60,000, Distribution = $40,000. You’ll only pay payroll tax on the salary: $60,000 × 15.3% = $9,180.

4. Compare the tax difference

As a sole proprietor, you’d pay $15,300 in self-employment tax. As an S-Corp, you’d pay $9,180 in payroll tax. That’s a tax savings of $6,120.

Need more help?

  • Check out our guide on all things S-Corp and whether you should elect as one.
  • Or book a consultation with a Keeper tax pro to discuss the pros and cons. Your first consultation is free when you activate a free trial on the premium plan.

Limits to this calculation:

This calculator gives you a quick estimate — but a few factors can affect your actual tax savings:

  • QBI Deduction (Section 199A)
    • The Qualified Business Income (QBI) deduction allows many self-employed people to deduct up to 20% of their business profit from their taxable income. When you elect S-Corp status, your reported profit is lower (because you’re paying yourself a salary), so your QBI deduction may be smaller.
  • Administrative costs
    • Running an S-Corp involves more administrative complexity. You’ll need to run payroll, file quarterly payroll tax forms, and submit a separate corporate tax return (Form 1120-S). Many business owners also hire a bookkeeper or use a payroll provider. These services can cost anywhere from $1,000 to $3,000 per year, which reduces your net savings.

Let Keeper handle your S-Corp taxes

Keeper combines smart automation with real CPAs to handle all your S-corp complexities. File personal and business taxes with AI speed and CPA accuracy. Every return is reviewed by a tax professional. Zero misses.

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Keeper Staff

GlobalTwitter

Keeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.