S corporation savings calculator
See whether electing S corporation status would lower your total tax for 2026, after payroll costs and any change in your qualified business income deduction. Built on 2026 federal and Colorado figures.
How the comparison works
As a sole proprietor or single-member LLC, all of your profit is subject to self-employment tax of 15.3% (on 92.35% of profit, up to the 2026 Social Security wage base of $184,500). As an S corporation, payroll taxes apply only to the salary you pay yourself; the rest of the profit passes through without them.
The trade-offs: payroll and a separate return cost money, and your salary is not qualified business income, so the 20% QBI deduction can shrink. The calculator weighs all three.
Where should we send your results?
Your results appear as soon as you submit. A member of our client services team may call to walk you through them; there is no obligation.
Your estimate for 2026
Savings at other salary levels
For comparison only. The salary has to be reasonable for the work you do; a lower salary is not automatically a better one.
Estimate only, using 2026 federal brackets, the standard deduction, the QBI deduction with its 2026 thresholds and Colorado's 4.4% rate. It ignores credits, itemized deductions, retirement contributions, health insurance, the 2.5% property alternative for QBI, and other states. Not tax advice; the right salary and election depend on facts we would review with you.
Want us to check the numbers before you elect?
We can confirm a defensible salary, the timing of the Form 2553 election and what payroll would look like for your business.
Common questions
At what profit does an S corporation start to make sense?
There is no single number. The savings come from paying self-employment tax only on a reasonable salary instead of all profit, and they have to outweigh payroll costs, a separate return and any loss of the qualified business income deduction. For many owners the math starts to work somewhere above $60,000 to $80,000 of steady profit, but the calculator shows your own break-even.
Why can an S corporation reduce my QBI deduction?
The 20% qualified business income deduction is calculated on business profit, and the salary you pay yourself from an S corporation is not qualified business income. A higher salary lowers the deduction. Above the 2026 income thresholds, though, W-2 wages can help you keep the deduction, which is why the result can swing either way.
How is "reasonable compensation" decided?
The IRS expects an S corporation owner who works in the business to take a salary comparable to what the business would pay someone else for the same work. It looks at the duties performed, the time spent and local pay for similar roles. Our reasonable compensation calculator builds that estimate from local wage data.
What costs come with running an S corporation?
Payroll processing, quarterly and annual payroll filings, a separate Form 1120-S return, and in Colorado state unemployment and FAMLI premiums on the salary. The calculator includes an annual amount for these costs that you can change.
Does this include Colorado tax?
Yes. It applies Colorado’s 4.4% income tax for 2026 to federal taxable income and adds back the QBI deduction where Colorado requires it at higher incomes. It does not include credits, itemized deductions or taxes in other states.
Let’s talk about your business
An introductory call with our client services team covers your needs, the scope of work and fit. Advice begins once an engagement is in place.