How the entity types compare
The same profit is taxed very differently by setup. In the calculator, flip a business's type dropdown, or use Compare mode to see all three at once.
→ Open the dedicated LLC vs S Corp tax calculator
Sole proprietor / single-member LLC
All net profit is self-employment income, hit with about 15.3% self-employment tax (Social Security up to the annual wage base, then uncapped Medicare) plus income tax. Usually eligible for the 20% QBI deduction. Simplest, highest payroll-type tax.
S-corporation
You take a reasonable W-2 salary (payroll tax applies) and the rest comes out as a distribution that avoids self-employment tax. The classic saving, though it shrinks if a big W-2 job already maxed out Social Security, and QBI only covers the pass-through portion.
C-corporation
The corporation pays a flat 21% federal tax on profit after your salary, then dividends are taxed again at capital-gains rates. Distributed profit is taxed twice; it can favor reinvesting and retaining earnings.
What's included
- Federal income tax for 2025 and 2026, all brackets, for single, married-jointly, and head-of-household
- Self-employment tax with the correct Social Security wage base, coordinated across all your wages
- Payroll (FICA), counting the employer half for S-corp and C-corp owners
- The 20% QBI deduction with the high-income phase-out and wage limit
- 0.9% additional Medicare surtax, 3.8% net investment income tax, and 21% corporate tax with qualified-dividend tax
- Estimated state income tax for all 50 states and DC