LLC Tax Calculator 2026

Estimate your self-employment tax, QBI deduction, and federal + state tax — and see whether an S-Corp election saves you money — in 60 seconds.

Quick answer

This calculator compares staying a sole proprietor against electing S-Corporation treatment, and it compares total cost — not just payroll tax. Every charge is a separate, configurable line: employer and employee payroll tax, the remaining distribution, the section 199A deduction, state income tax, state entity-level tax, payroll service, tax preparation, bookkeeping, unemployment insurance and optional workers' compensation.

What this includes

  • Employer and employee payroll tax on the owner's salary, shown separately
  • Self-employment tax on the sole-proprietor side, coordinated with the Social Security wage base
  • Federal and state unemployment tax, which most comparisons omit entirely
  • The section 199A deduction on both sides, including the W-2 wage limit above the threshold
  • State entity-level tax where it is modelled — California, Texas and Illinois
  • Payroll service, Form 1120-S preparation, bookkeeping and optional workers' compensation
  • The Solo 401(k) contribution ceiling, which differs sharply between the two structures

What it excludes

  • Any pass-through entity elective tax, including California's 9.3% PTE election
  • Entity-level taxes for the 47 states not modelled — the page says so rather than showing $0
  • Multi-owner allocations, guaranteed payments and basis limitations
  • State conformity differences on the section 199A deduction

The 2026 rule most people get wrong: the S-Corp saving is not the payroll-tax difference. In California a sole proprietor LLC pays an $800 annual tax plus an LLC fee measured on TOTAL INCOME — $900 from $250,000 of revenue, $6,000 from $1m — while an S-Corporation pays 1.5% of its net income or the $800 minimum franchise tax, whichever is greater. Those charges routinely move the answer by more than a thousand dollars a year, and at low profits they reverse it. A comparison that stops at federal payroll tax is not comparing the two structures.

How these figures are calculated · California FTB — LLCs · California FTB — S corporations · Tax data last verified

2026 tax inputs and methodology reviewed by Deepak Middha, Chartered AccountantPassed the Series 65 examinationMethodologyEditorial standardsMethodology reviewed

The business
Net business profit
$
Revenue minus business expenses, before any owner salary
Gross revenue
$
Drives a gross-receipts fee where the state charges one. California's LLC fee is measured on total income, not on profit.
W-2 wages paid to staff
$
Excluding the owner. Counts toward the section 199A wage limit on both sides.
State
Entity-level taxes are modelled for California, Texas and Illinois. Elsewhere only personal state income tax is included, and the page says so.
Reasonable S-Corp salary
Owner W-2 salary$60,000
⚠️ There is no formula. The IRS asks what the business would pay someone else for the same work, and weighs your training, duties, hours, comparable pay and the size of your distributions. Setting the salary low to cut payroll tax is a documented audit trigger — and it also caps your retirement contribution, which this calculator shows below.
Cost of running an S-Corp
Payroll service
$
Form 1120-S preparation
$
Bookkeeping
$
Workers' compensation
$
Optional — see the note in the results

Federal and state unemployment tax are added automatically from the salary and the state — they are not optional, and a comparison that leaves them out overstates the S-Corp by a few hundred dollars.

Household, retirement and health
Other household income
$
A spouse's wages, for example
Filing status
Solo 401(k) contribution
$
Capped at 20% of net earnings as a sole proprietor, but at 25% of your W-2 salary as an S-Corp
Health insurance premiums
$
Deducted above the line either way; as an S-Corp they must run through your W-2 as wages not subject to FICA
Net annual benefit after every included cost
$2,604
an S-Corp election costs $2,604 less per year than staying a sole proprietor, at this profit and this salary, after payroll tax, income tax, state tax, entity-level tax and running costs.
Payroll-tax difference alone: $7,488 — which is the only figure most comparisons publish.
Side by side
Single-member LLC taxed as a sole proprietor
Payroll / SE tax$16,955
Federal income tax$11,506
State income tax$7,879
State entity tax$800
Operating costs$0
Total cost
$37,141
S-Corporation election
Payroll / SE tax$9,467
Federal income tax$13,596
State income tax$7,973
State entity tax$800
Operating costs$2,700
Total cost
$34,537

The baseline is a single-member LLC, not an unincorporated sole proprietor, because it is charged California's LLC annual tax and fee. A sole proprietor with no LLC would owe neither — subtract $800 from the baseline to see that case. A general partnership is also outside the LLC charges, while a multi-member LLC taxed as a partnership pays them in full. Enter your own share of the profit for any multi-owner entity; guaranteed payments are not modelled.

How the S-Corp profit splits
Net business profit$120,000
Owner W-2 salary−$60,000
Employer payroll tax on that salary−$4,877
Employer FICA $4,590 + FUTA $42 + California unemployment $238 + California Employment Training Tax (ETT) $7
S-Corp running costs−$2,700
Remaining distribution (K-1 ordinary income)$52,423
No Social Security or Medicare tax applies to this. It is still fully subject to income tax.
Employee payroll tax withheld from salary$4,590
California entity-level taxes
Single-member LLC taxed as a sole proprietor
California LLC annual tax$800
A flat annual tax on the LLC itself. It is owed whether or not the business made a profit.
California LLC fee$0
Measured on total California income (gross receipts plus cost of goods sold), not net profit. At $120,000 of total income the fee is $0.
Total$800
As an S-Corporation
California minimum franchise tax$800
The $800 minimum applies because 1.5% of $52,423 of entity net income is only $786.
Total$800
Pass-through entity election: California's 9.3% pass-through entity elective tax is available for 2026: SB 132 extended it to taxable years beginning on or after January 1, 2026 and before January 1, 2031. It is NOT included in the figures on this page. The election shifts state tax to the entity in exchange for a credit on each owner's personal return, so its net value depends on each owner's own California liability and on the federal SALT limitation — inputs this calculator does not collect. Treat the comparison as the no-election case.
Retirement plan effect
Maximum employer contribution as a sole proprietor$22,304
Roughly 20% of net earnings from self-employment
Maximum employer contribution as an S-Corp$15,000
25% of the W-2 salary — so a lower salary shelters less
2026 quarterly estimated payments
Q1$7,959
Due Apr 15, 2026
Q2$7,959
Due Jun 15, 2026
Q3$7,959
Due Sep 15, 2026
Q4$7,959
Due Jan 15, 2027
Total tax ÷ 4 for the cheaper structure. As an S-Corp much of this is withheld through payroll instead. Avoid an underpayment penalty by paying at least 90% of this year's tax, or 100% of last year's — 110% if prior-year AGI exceeded $150,000.
Not included
  • State individual income tax is a preliminary estimate pending the complete 2026 state-engine verification. Entity-level taxes and fees shown above have been separately modelled and are held apart from it.
  • Any pass-through entity elective tax, including California's.
  • The deduction the entity gets for its own state entity tax, which slightly overstates that cost.
  • Multi-owner allocations, guaranteed payments and basis limitations.
  • State conformity differences on the section 199A deduction.
  • Workers' compensation is insurance, not a tax. Premiums are set per $100 of payroll by class code, state and carrier, and an owner-officer can often elect out. It is an optional input here rather than an assumed cost, because any default would be wrong for most readers.

Educational estimate only — not tax, legal or financial advice. Effective tax rate on profit: sole proprietor 31.0%, S-Corp 28.8%. Entity choice has legal consequences beyond tax; confirm with a CPA or tax attorney before electing.

Sole proprietor vs S-Corp at seven profit levels, in California

California is shown because it is the state where entity-level charges bite hardest and where the old version of this page was most wrong. Every figure is produced by the calculator above.

Business profit only, the standard deduction, no dependents, no other household income, no retirement contribution and no health insurance. Gross revenue is taken to equal net profit, which understates a gross-receipts fee for any business with real costs. The reasonable salary in each row is 60% of profit, floored at $30,000 and capped at $160,000 — a transparent rule for a published table, not an IRS standard. Total tax includes federal income tax, every payroll and self-employment tax, state income tax, and state entity-level tax where the state is modelled.
Net profitSalary usedSingle-member LLC total taxS-Corp total taxS-Corp operating costsNet difference
$50,000$30,000$12,189$10,041$2,700−$552
$75,000$45,000$19,833$16,889$2,700+$244
$100,000$60,000$29,092$26,217$2,700+$175
$120,000$72,000$37,141$33,943$2,700+$498
$150,000$90,000$49,214$45,698$2,700+$816
$200,000$120,000$69,917$66,114$2,700+$1,103
$300,000$160,000$119,871$107,155$2,700+$10,016

Two things in this table are worth more than the headline numbers. At $50,000 of profit the S-Corp costs more: the payroll-tax saving is real but it is smaller than the running costs and the franchise tax. And between $200,000 and$300,000 the gap widens sharply — not because of payroll tax, but because the sole proprietor's section 199A deduction is being phased out by the W-2 wage limit while the S-Corp's salary preserves it. That effect is invisible on any page that compares only FICA.

Worked example: a single-member LLC earning $120,000 in California

A freelance designer, single-member LLC, $120,000 of net profit and $120,000 of revenue, filing single in California. As a single-member LLC taxed as a sole proprietor self-employment tax is $16,955 — 15.3% on 92.35% of profit, all of it under the Social Security wage base. The section 199A deduction removes $19,084 from taxable income, leaving $11,506 of federal income tax and $7,879 of California tax. On top of that the LLC itself owes the $800 California annual tax — no LLC fee, because revenue is under $250,000. Total: $37,141.

Now elect S-Corp status with a $60,000 salary. Payroll tax applies only to the salary, so the combined employer and employee payroll bill is $9,467 — down $7,488. But federal income tax rises to $13,596, because the smaller distribution means a smaller section 199A deduction ($10,485 against $19,084). California charges the corporation $800, and running it costs $2,700 in payroll service, bookkeeping and the 1120-S return. Total: $34,537.

The election is $2,604 cheaper a year here — roughly a third of the $7,488 payroll-tax figure that most comparisons publish as the answer.

California, specifically

California charges the entity as well as the owner, and the two structures are charged differently. These are the figures this calculator applies.

California LLC fee by total income — Rev. & Tax. Code § 17942. Measured on total California income (gross receipts plus cost of goods sold), NOT on net profit.
Total California incomeLLC fee
Under $250,000$0
$250,000 – $499,999$900
$500,000 – $999,999$2,500
$1,000,000 – $4,999,999$6,000
$5,000,000 or more$11,790
  • S-Corporation tax: 1.5% of net income, or the $800 minimum franchise tax — whichever is greater, not both. Adding them would overstate every low-profit S-Corp.
  • LLC annual tax: $800 a year, owed whether or not the business made a profit.
  • First-year exceptions: California waives the $800 minimum franchise tax for a corporation's first taxable year, and the calculator applies that when you tick the first-year box. The 1.5% tax on net income is not waived. The separate first-year LLC annual-tax exemption applied only to LLCs organising between January 1, 2021 and January 1, 2024 and has expired — a first-year LLC in 2026 owes the $800.
  • The PTE election is NOT included. California's 9.3% pass-through entity elective tax is available for 2026: SB 132 extended it to taxable years beginning on or after January 1, 2026 and before January 1, 2031. It is NOT included in the figures on this page. The election shifts state tax to the entity in exchange for a credit on each owner's personal return, so its net value depends on each owner's own California liability and on the federal SALT limitation — inputs this calculator does not collect. Treat the comparison as the no-election case.

How LLCs are taxed

An LLC is a legal structure, not a tax classification. By default the IRS taxes it as a pass-through: the LLC pays no federal income tax of its own, and profit “passes through” to the owners, who report it on their personal returns. This avoids the double taxation that hits C-Corporations.

Through the “check-the-box” rules, an LLC can choose how it is taxed. A single-member LLC is a disregarded entity (taxed like a sole proprietor on Schedule C) but can elect to be taxed as an S-Corp or C-Corp. A multi-member LLC is taxed as a partnership (Form 1065, K-1s to each owner) by default, and can also elect S-Corp or C-Corp treatment. The election changes the tax math — not your legal liability protection.

Single-member vs multi-member LLCs

A single-member LLC reports business income on Schedule C of the owner's 1040 and pays self-employment tax on the full profit via Schedule SE. A multi-member LLC files an informational partnership return (Form 1065) and issues each member a K-1 reporting their share of profit; each member then pays income and self-employment tax on their share. In this calculator, enter your shareof the profit for a multi-member LLC. Guaranteed payments to partners are taxed slightly differently and aren't modeled here.

When an S-Corp election saves money — and what it really costs

The S-Corp pitch is simple: split your profit into a reasonable W-2 salary (subject to payroll tax) and distributions (not subject to self-employment tax). The lower your salary, the less payroll tax — but the IRS requires that salary to be reasonable for the work you do, and lowballing it is a well-known audit trigger.

The saving is real but it is bounded by four things, not one. An S-Corp adds a payroll service, bookkeeping and a separate 1120-S return — commonly $2,000–$3,000 a year. It adds federal and state unemployment tax on the salary, a few hundred dollars more. It can add a state entity-level tax the sole proprietor would not pay. And it can reduce your Solo 401(k) ceiling, because the employer contribution is 25% of your W-2 salary rather than 20% of your net earnings. The commonly quoted “pays off above $80,000 of profit” is a reasonable first approximation, and the California table above shows it holding at $75,000 and failing at $50,000 — but the crossover moves with your state, your salary and your running costs, which is what the calculator is for.

The QBI (Section 199A) deduction, explained

The Qualified Business Income deduction lets most pass-through owners deduct up to 20% of their qualified business income, on top of the standard deduction. Below the 2026 taxable-income thresholds (about $201,750 single / $403,500 married), almost every business qualifies for the full 20%. Above the thresholds, two limits kick in: specified service businesses (law, health, accounting, consulting, financial services) phase out entirely, while other businesses are capped at 50% of W-2 wages paid. That wage limit is one reason high-earning owners elect S-Corp status — paying yourself a salary creates W-2 wages that can preserve part of the QBI deduction.

LLC tax FAQs

How much tax does an LLC pay?

An LLC usually pays no separate federal income tax — by default it is a pass-through entity, so profit flows to the owners' personal returns. A single-member LLC owner pays self-employment tax (12.4% Social Security up to the wage base plus 2.9% Medicare, on 92.35% of profit) plus federal and state income tax. On $120,000 of net profit a single filer pays about $16,955 of self-employment tax and about $11,506 of federal income tax after the section 199A deduction. Several states also charge the LLC itself: California adds an $800 annual tax, and an LLC fee on top of that once total income reaches $250,000.

Is this LLC tax calculator accurate for 2026?

It uses 2026 federal brackets and the standard deduction, the self-employment tax rules (92.35% net earnings, 15.3% up to the Social Security wage base, plus Medicare and the 0.9% additional Medicare surtax), the Section 199A QBI deduction, and state income tax pulled from each state's 2026 data. It is an educational estimate — it doesn't model every credit, the UBIA property limit, or guaranteed payments — so confirm with a CPA before filing.

LLC vs S-Corp taxes in 2026 — which saves money?

An S-Corp election splits profit into a reasonable W-2 salary (subject to payroll tax) and distributions (not subject to self-employment tax), which cuts the payroll-tax bill. That difference is not the saving, though. Against it you have to set the running costs — payroll service, bookkeeping and a separate Form 1120-S return — plus federal and state unemployment tax on the salary, plus whatever your state charges the entity itself. In California that means a 1.5% S-Corporation tax with an $800 minimum franchise tax, against the $800 annual tax and the income-based LLC fee a sole-proprietor LLC pays. On $120,000 of California profit the payroll-tax difference is around $7,500 but the net benefit after everything is closer to $2,600. The scenario table on this page shows where the crossover actually falls.

What is the QBI deduction and does my LLC qualify?

The Qualified Business Income (Section 199A) deduction lets most pass-through owners deduct up to 20% of qualified business income. Below the 2026 taxable-income thresholds (about $201,750 single / $403,500 married), nearly all businesses qualify. Above them, specified service businesses (SSTBs) — law, health, accounting, consulting, finance — phase out, and other businesses become limited by W-2 wages paid. Toggle the SSTB box in the calculator to see the effect.

Does a single-member LLC file a separate tax return?

No. A single-member LLC is a 'disregarded entity' by default — you report its income and expenses on Schedule C of your personal Form 1040, and pay self-employment tax via Schedule SE. A multi-member LLC files a partnership return (Form 1065) and issues each owner a K-1. Electing S-Corp status changes this: the LLC files Form 1120-S and you take a W-2 salary.

Do LLC owners have to pay quarterly estimated taxes?

Usually yes. Because no employer withholds tax from LLC profit, owners generally make quarterly estimated payments (Form 1040-ES) to cover income and self-employment tax. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027. To avoid a penalty, pay at least 90% of this year's tax or 100% of last year's (110% if prior-year AGI exceeded $150,000).

Methodology and sources

How the LLC / S-Corp Tax Calculator works for tax year 2026, what it leaves out, and the official material behind its figures. Reviewed by Deepak Middha, Chartered Accountant · Data, formulas and sources last re-verified .

What this calculator estimates

  • Federal tax for a single-member LLC taxed as a sole proprietorship
  • Federal tax under an S-corporation election with a stated salary
  • The payroll-tax difference between the two structures
  • The QBI deduction available in each case

What it does not calculate

  • Whether an S-corp election is appropriate for your business
  • What salary level the IRS would consider reasonable compensation for you
  • Payroll-service, accounting, or state filing costs beyond a stated estimate
  • State franchise, gross-receipts, or entity-level taxes

Formula summary

  • Sole proprietorship: net profit × 92.35% × 15.3% up to the wage base = self-employment tax; income tax then applies to profit less half of SE tax and less QBI
  • S corporation: payroll tax of 15.3% applies to the reasonable salary only; the remaining distribution is not subject to self-employment tax
  • Both paths compute income tax on the same 2026 brackets so only the payroll-tax and QBI effects differ
  • The comparison subtracts an estimated cost of running payroll under the S-corp path

Tax-year assumptions

  • Uses the 2026 Social Security wage base and 2026 federal brackets
  • Assumes the election is in place for the full year
  • Business mileage uses the two 2026 standard rate periods — 72.5¢ per mile for miles driven January 1 through June 30 and 76¢ per mile for miles driven July 1 through December 31

Filing-status assumptions

  • All four filing statuses are supported for the owner's personal return
  • Assumes a single owner; multi-member allocation is not modelled

Important exclusions

  • Partnership and C-corporation taxation
  • Section 199A limits tied to W-2 wages and qualified property for higher-income owners
  • State entity-level elections such as pass-through entity taxes

Official sources used on this page

Educational use only — these figures are estimates, not a tax filing or personalized advice. Read the editorial methodology or report a correction.

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Educational use only. This calculator provides a simplified 2026 estimate of LLC, self-employment, and income taxes. It is not tax, legal, or financial advice and does not account for every credit, deduction, or election. Reasonable-compensation and entity decisions have legal consequences — confirm your situation with a qualified CPA or tax attorney.