Enter your annual profit, state, and filing status to see how much you'd pay in taxes under each entity structure, and which one saves you the most.
Enter your profit, state, and filing status to compare taxes under LLC, S-Corp, and C-Corp structures. Source: MyStateLLC LLC vs C-Corp Tax Calculator.
Why entity structure changes your tax bill
The legal structure you choose isn't just a paperwork decision. It determines how much of your profit goes to taxes each year. An LLC taxed as a sole proprietor pays 15.3% self-employment tax on every dollar of net profit. An S-Corp splits income into salary and distributions, applying payroll taxes only to the salary portion. A C-Corp pays a flat 21% federal corporate rate, but profits distributed as dividends face a second layer of tax.
LLCs pay self-employment tax (15.3%) on 100% of net profit up to the Social Security wage base
S-Corps can reduce SE tax by paying a “reasonable salary”. Only salary is subject to payroll taxes
C-Corps face double taxation: 21% corporate tax + 15% qualified dividend rate on distributions
S-Corp savings are real but offset by added compliance costs (~$1,500 to $3,000/year for payroll)
How This Calculator Works
The calculator estimates annual tax burden for three entity structures using 2026 IRS tax brackets, the 15.3% self-employment tax rate (capped at the $184,500 Social Security wage base), and approximate state income and corporate tax rates. LLC taxes include full self-employment tax on all profit. S-Corp taxes use a reasonable salary (approximately 40% of profit, floored at $45,000 and capped at $100,000) with payroll taxes on salary only, plus a $1,500 annual compliance estimate. C-Corp taxes include the 21% federal corporate rate, state corporate rate, and a 15% qualified dividend rate on distributions.
These are estimates. The tool does not account for the QBI deduction (IRC §199A), retirement plan contributions, health insurance deductions, or other deductions that can significantly reduce taxable income. Always consult a CPA before choosing an entity structure.
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Frequently Asked Questions
Generally when net profit exceeds $40,000 to $50,000/year. Below that threshold, S-Corp compliance costs (payroll processing, additional tax filings, registered agent fees) typically exceed the self-employment tax savings. The crossover point depends on your state's taxes and the size of your reasonable salary.
The IRS requires S-Corp owner-employees to pay themselves a reasonable salary, roughly what you'd pay someone else to do your job. You can't pay yourself $1 to avoid payroll taxes. The IRS can recharacterize distributions as salary and assess back taxes plus penalties if your salary is unreasonably low.
Yes, in the traditional sense. A C-Corp pays 21% federal corporate income tax on profits. When those after-tax profits are distributed to shareholders as dividends, shareholders pay a second tax, typically 15% (or 20% for high earners) on qualified dividends. This double layer makes C-Corps less efficient for small businesses that plan to distribute profits.
The Section 199A qualified business income (QBI) deduction can reduce taxable income by up to 20% for LLC and S-Corp pass-through income, but it phases out at higher income levels and has complex rules around specified service trades. Including it accurately would require more inputs than a quick calculator provides. Consult a CPA to model your specific QBI benefit.
Yes. By default, a single-member LLC is taxed as a sole proprietor and a multi-member LLC as a partnership. An LLC can elect S-Corp tax treatment by filing IRS Form 2553. The LLC remains an LLC for legal purposes. Only its tax classification changes.
Significantly. States with high income tax rates (California, New York, Oregon) amplify the federal tax differences. Some states also impose additional franchise taxes or fees on S-Corps and C-Corps that can offset federal savings. This calculator includes approximate state income and corporate tax rates to give you a state-specific estimate.
Edmond Hui is a software engineer and serial entrepreneur based in New York who has founded multiple online businesses across e-commerce, media, and information publishing. Before transitioning into tech, he spent years as a commercial real estate professional closing deals totaling over 100,000 square feet, giving him firsthand experience with business formation and entity structuring. He built MyStateLLC to provide the free, state-specific LLC guidance he wished existed when forming his own companies.
