Free tool · Self-employed
Will an S corp save me money?
An S-corp election can cut self-employment tax, because only your salary is subject to Social Security and Medicare, not the rest of the profit. But you add payroll taxes, payroll and accounting costs, state fees and a separate return. This calculator nets them against each other. If the saving is small, it says so plainly.
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Which states charge S corporations extra?
Some states tax S corporations at the entity level or charge franchise or minimum taxes; some of these also apply to LLCs. Every state charges employers unemployment tax (SUTA) on wages up to a wage base, which the calculator prefills. Federal unemployment tax (FUTA) applies to the first $7,000 of wages in every state.
| State | S-corp / entity-level tax | SUTA wage base 2026 | New-employer SUTA rate | Sources |
|---|---|---|---|---|
| Alabama | Alabama Business Privilege Tax (BPT) applies to S corporations (filed on Form PPT). Tax = taxable Alabama net worth x a rate set by federal taxable income apportioned to Alabama: $0.25 per $1,000 of net worth (income under $1), $1.00 (under $200,000), $1.25 ($200,000 to under $500,000), $1.50 ($500,000 to under $2,500,000), $1.75 ($2,500,000 or more); maximum $15,000 for S corporations, LLEs and disregarded entities (Ala. Code 40-14A-22). For taxable years beginning after Dec 31, 2023 there is a full exemption when BPT due is $100 or less (Act 2022-252), and no BPT return is required in that case, so many small S corps owe $0. No Alabama income tax on ordinary S-corp income at the entity level (income passes through; nonresident-shareholder composite/withholding rules may apply). Optional: for tax years beginning on or after Jan 1, 2021 an Alabama S corporation may elect to be taxed as an Electing Pass-Through Entity (SALT-cap workaround); elective, not mandatory. | $8,000 | 2.7% | SUTA · Entity tax |
| Alaska | None | $54,200 | 1% | SUTA · Entity tax |
| Arizona | None | $8,000 | 2% | SUTA · Entity tax Re-verifying |
| Arkansas | Arkansas corporation franchise tax (Secretary of State): corporations with stock pay 0.3% (x .003) of Arkansas-apportioned issued and outstanding capital stock (par value; no-par stock valued at $25 per share), minimum $150; corporations without stock $300; LLCs a flat $150. The 2026 report and tax are due on or before May 1, 2026. It is based on capital stock, not income. No Arkansas income tax on ordinary S-corp income at the entity level (AR1100S passes income to shareholders); an S corp can owe Arkansas excess net passive income tax (AR1100S line 28) in limited cases; nonresident-shareholder withholding/composite rules apply. Optional: Elective Pass-Through Entity Tax (Act 362 of 2021) for tax years beginning on or after Jan 1, 2022, at the highest individual income tax rate; elective, not mandatory. | $7,000 | 2% | SUTA · Entity tax Re-verifying |
| California | FTB taxes every S corporation with California source income at 1.5% of net income, subject to the $800 annual minimum franchise tax (due the first quarter of each accounting period; owed even if inactive or operating at a loss). FTB waives the minimum tax for newly formed or qualified S corporations filing an initial return for their first taxable year (first-year net income is still taxed at 1.5%), and where the S corp did no business in CA and the taxable year was 15 days or fewer. (The separate AB 85 first-year $800 exemption for LLCs/LPs/LLPs covered only 2021-2023 and does not apply to S corporations; not re-verified here.) Optional: Pass-Through Entity (PTE) elective tax at 9.3% of qualified net income, extended to taxable years beginning on or after Jan 1, 2026 and before Jan 1, 2031 (election on a timely filed original return with FTB 3804; June 15 payment of the greater of $1,000 or 50% of prior-year PTE tax; for 2026-2030 a missed or short June 15 payment no longer voids the election but reduces the credit by 12.5% of the unpaid amount). Elective, not mandatory. | $7,000 | 3.4% | SUTA · Entity tax |
| Colorado | None | $30,600 | — | SUTA · Entity tax |
| Connecticut | None | $27,000 | 1.9% | SUTA · Entity tax Re-verifying |
| Delaware | No Delaware corporate income tax on S-corporation pass-through income: the Division of Revenue FAQ states 'Delaware recognizes the federal S election and does not impose corporate income tax on pass-through income' (S corps file Form SCT-RTN; the C-corp rate is 8.7%). Corporations INCORPORATED in Delaware owe annual franchise tax (Division of Corporations): minimum $175 under the Authorized Shares Method; minimum $400 under the Assumed Par Value Capital Method; maximum $200,000 for both methods ($250,000 for Large Corporate Filers); plus the annual report filing fee ($50 for a non-exempt domestic corporation). Foreign (non-DE) corporations pay no DE franchise tax but file an annual report with a $250 fee. Separately, Delaware's Gross Receipts Tax applies to businesses of all entity types (not income-based): rates range from 0.0945% to 1.9914% by business activity (petroleum variable up to 2.4218%), with monthly/quarterly exclusions generally starting at $100,000 per month (up to $1,250,000) depending on activity. No elective PTE tax was found for Delaware. | $14,500 | — | SUTA · Entity tax Re-verifying |
| District of Columbia | DC does not follow the federal S election: the OTR FAQ states every corporation must file the Corporate Franchise Tax Return (Form D-20), 'including small businesses, professional corporations, and S corporations', if it engages in business in DC or receives DC-source income. Corporate franchise tax rate: 8.25% of DC taxable income (combined reporting) for tax years 2018-2025 per OTR's rate table (the 2026 row is not yet posted). Minimum tax: $250 if DC gross receipts are $1 million or less; $1,000 if DC gross receipts exceed $1 million (the minimum applies even if income is exempt). For comparison, DC's Unincorporated Business Franchise Tax (for LLCs/partnerships) is also 8.25% with the same minimums, but it allows a 30% owner salary allowance and a $5,000 exemption, and it exempts businesses where more than 80% of gross income comes from members' personal services and capital is not material. So the S-corp vs LLC result in DC differs materially. | $9,000 | 2.7% | SUTA · Entity tax Re-verifying |
| Florida | None | $7,000 | 2.7% | SUTA · Entity tax |
| Georgia | Georgia recognizes the S election (income passes to shareholders), but ALL corporations, including S corporations, are subject to the NET WORTH TAX (filed on Form 600S). Net worth tax schedule (2025 IT-611S booklet; domestic corps use total net worth, foreign corps the Georgia-apportioned net worth): not exceeding $100,000 = $0 (return still required); $100,001-$150,000 = $125; $150,001-$200,000 = $150; $200,001-$300,000 = $200; $300,001-$500,000 = $250; $500,001-$750,000 = $300; $750,001-$1,000,000 = $500; $1,000,001-$2,000,000 = $750; $2,000,001-$4,000,000 = $1,000; $4,000,001-$6,000,000 = $1,250; $6,000,001-$8,000,000 = $1,500; $8,000,001-$10,000,000 = $1,750; $10,000,001-$12,000,000 = $2,000; $12,000,001-$14,000,000 = $2,500; $14,000,001-$16,000,000 = $3,000; $16,000,001-$18,000,000 = $3,500; $18,000,001-$20,000,000 = $4,000; $20,000,001-$22,000,000 = $4,500; over $22,000,000 = $5,000. Net worth includes issued capital stock, paid-in surplus and earned surplus. LLCs taxed as partnerships and disregarded SMLLCs are NOT subject to net worth tax. Elective PTE tax: an S corporation may make an irrevocable election to pay income tax at the entity level at the individual income tax rate for the year - 5.19% for tax years beginning in 2025 (2026 rate not verified). Nonresident shareholders must sign Form 600S-CA consents, or the Georgia S election is terminated (the corporation is then taxed as a C corp; the corporate rate was 5.19% for 2025). | $9,500 | 2.7% | SUTA · Entity tax Re-verifying |
| Hawaii | None | $64,500 | 2.4% | SUTA · Entity tax |
| Idaho | Idaho Form 41S (2025 instructions, Line 50): a $20 minimum tax is required for each corporation that transacts business in Idaho, is registered with the Idaho Secretary of State, or exercises its corporate franchise in Idaho, and the instructions state 'This includes an S corporation.' Corporations protected by Public Law 86-272 do not owe it. Permanent Building Fund tax (Line 51): $10, but the instructions say it doesn't apply 'if all income/loss of the entity is distributed to or otherwise reported on the income tax return of another taxpayer', so a typical S corporation whose income all passes through doesn't pay it. The $10 PBF does apply when the S corp owes tax on excess net passive income or built-in gains, for each individual included in a composite return, and, for an ABE, for each nonresident member. Excess net passive income and net recognized built-in gains are taxed at 5.3% (tax year 2025 rate on Form 41S), and the total tax can't be less than $20. Nonresident shareholders: the S corp must withhold pass-through tax, file a composite return, or get a PTE-NROA agreement from the shareholder. Optional PTE tax: an S corp can elect to be an Affected Business Entity (ABE) and pay tax at the entity level at 5.3% for tax year 2025 (Form 41S Line 44). | $58,300 | 1% | SUTA · Entity tax |
| Illinois | Illinois Personal Property Replacement Income Tax on S corporations: 1.5% of net income (IDOR tax rates page: 'Partnerships, trusts, and S corporations - 1.5 percent of net income'; C corporations pay 2.5%). It is filed on Form IL-1120-ST, and there is no minimum tax. Optional PTE tax: an S corp may elect to pay pass-through entity tax at 4.95% of its calculated net income (IL-1120-ST Step 1 Line L / Line 61). The 2025 IL-1120-ST instructions state that the Illinois Income Tax Act 'was amended to remove the expiration date for the pass-through entity tax.' Separately, Illinois corporations (including S corps) owe Secretary of State franchise tax (see annual_report_or_franchise_fee_note). On and after 1/1/2025, the first $10,000 of franchise tax liability is exempt, so small S corps generally owe $0. | $14,250 | 3.35% | SUTA · Entity tax |
| Indiana | None | $9,500 | 2.5% | SUTA · Entity tax |
| Iowa | None | $20,400 | — | SUTA · Entity tax |
| Kansas | None | $15,100 | — | SUTA · Entity tax Re-verifying |
| Kentucky | Kentucky Limited Liability Entity Tax (LLET) applies to S corporations, corporations, LLCs, limited partnerships and other limited-liability entities, but not to sole proprietorships or general partnerships. Pub. L. 86-272 protections don't apply to it. If total gross receipts or total gross profits are $3 million or less, the entity pays only the $175 minimum. Above $6 million, LLET is the lesser of 0.095% of Kentucky gross receipts or 0.75% of Kentucky gross profits, with a sliding-scale formula between $3M and $6M. Shareholders get a nonrefundable credit for their share of LLET minus the $175 minimum. S corps also pay entity-level tax on LIFO recapture, built-in gains (IRC 1374) and net passive investment income (IRC 1375) at 5% (Form PTE instructions, 2023 edition). S corps file Form PTE (Pass-Through Entity Income and LLET Return). Optional PTE tax: an electing pass-through entity can pay Kentucky income tax at the entity level (KRS 141.209, Form 740-PTET). The 2023 PTET instructions use 4.5%; the current-year rate was not verified. | $12,000 | — | SUTA · Entity tax |
| Louisiana | None | $7,000 | — | SUTA · Entity tax Re-verifying |
| Maine | None | $12,000 | 2.54% | SUTA · Entity tax Re-verifying |
| Maryland | None | $8,500 | 1%–2.6% | SUTA · Entity tax Re-verifying |
| Massachusetts | Massachusetts S corporation excise (G.L. c. 63 secs. 32D, 39), non-financial-institution S corps: minimum excise $456. Non-income measure: $2.60 per $1,000 of tangible property or taxable net worth. Income measure at entity level applies only to larger S corps: total receipts $6 million or more but less than $9 million - 2% of net income; total receipts $9 million or more - 3% of net income. Net income taxable at the federal level (IRC 1374 built-in gains, IRC 1375 passive investment income) - 8%. S corps that are financial institutions: 2.67% ($6M-$9M receipts), 4% ($9M+), 9% on federally taxed income, $456 minimum. A small S corp (<$6M receipts) typically pays the greater of the $456 minimum or the $2.60/$1,000 property/net-worth measure. Massachusetts also has an elective pass-through entity excise (G.L. c. 63D); its availability/rate for 2026 was not verified. | $15,000 | — | SUTA · Entity tax Re-verifying |
| Michigan | None | $9,000 | — | SUTA · Entity tax |
| Minnesota | S corporations pay only the Minnesota minimum fee (plus tax on federally taxed built-in gains/passive investment income under Minn. Stat. 290.9727-290.9729). Minn. Stat. 290.9725: an S corporation is not subject to Chapter 290 taxes except secs. 290.0922 (minimum fee), 290.92 (withholding), 290.9727-290.9729. 2026 minimum fee (based on total Minnesota property + payroll + sales/receipts): less than $1,280,000 - $0; $1,280,000-$2,559,999 - $260; $2,560,000-$12,829,999 - $770; $12,830,000-$25,639,999 - $2,560; $25,640,000-$51,279,999 - $5,140; $51,280,000 or more - $12,830. (2025: <$1,250,000 $0; $1,250,000-$2,509,999 $260; $2,510,000-$12,539,999 $750; $12,540,000-$25,069,999 $2,510; $25,070,000-$50,139,999 $5,020; $50,140,000+ $12,540.) Elective Pass-Through Entity (PTE) tax: available only for tax years beginning before Jan 1, 2026 - MN DOR states it 'has expired for tax years beginning after December 31, 2025.' | $44,000 | 1%–8.9% | SUTA · Entity tax Re-verifying |
| Mississippi | Mississippi franchise tax applies to S corporations at the entity level (MS DOR FAQ: 'All S Corporations are subject to franchise tax which is taxed and paid at the entity level'). Income tax itself passes through to shareholders (S corps file as a pass-through entity). Franchise tax is computed per $1,000 (or fraction) of the value of capital employed in Mississippi IN EXCESS OF $100,000, or the assessed property values in MS, whichever is greater; minimum $25. Phase-down per MS DOR FAQ: tax years beginning in 2025 = $0.75 per $1,000; tax years beginning in 2026 = $0.50 per $1,000 (0.05%); tax years beginning in 2027 = $0.25 per $1,000. (The FAQ lists rates only through tax years beginning before 1/1/2028.) An LLC treated as a partnership for federal purposes files as a pass-through entity; an LLC taxed as a corporation files as a corporation for income and franchise tax. Optional: since 2022 a partnership or S corporation may elect to be taxed as an Electing Pass-Through Entity (Form 84-381); rate not captured here. Nonresident shareholders may also elect composite filing. | $14,000 | 1%–1.2% | SUTA · Entity tax Re-verifying |
| Missouri | None | $9,000 | — | SUTA · Entity tax |
| Montana | None | $47,300 | — | SUTA · Entity tax |
| Nebraska | No Nebraska entity-level income tax on a typical S corporation (Form 1120-SN pass-through return; S corp withholds NE income tax for nonresident individual shareholders unless PTET is elected). Corporations (incl. S corps) pay a BIENNIAL occupation tax to the Secretary of State with the biennial report in even-numbered years (due March 1, delinquent April 15), based on paid-up capital stock (Neb. Rev. Stat. 21-303, domestic corporations): <= $10,000: $26; $10,001-20,000: $40; -30,000: $60; -40,000: $80; -50,000: $100; -60,000: $120; -70,000: $140; -80,000: $160; -90,000: $180; -100,000: $200; -125,000: $240; -150,000: $280; -175,000: $320; -200,000: $360; -225,000: $400; -250,000: $440; -275,000: $480; -300,000: $520; -325,000: $560; -350,000: $600; -400,000: $666; -450,000: $730; -500,000: $800; -600,000: $910; -700,000: $1,010; -800,000: $1,120; -900,000: $1,230; -1,000,000: $1,330; $1M-$10M: $1,330 plus $800 per additional million or fraction; $10M-15M: $12,000; $15M-20M: $14,660; $20M-25M: $17,330; $25M-50M: $20,660; $50M-100M: $21,330; > $100M: $23,990. Minimum $26 (i.e., $26 per two years for a typical small S corp). Foreign corporations are taxed under a separate section (21-305), not captured here. Optional: elective pass-through entity tax (PTET) - 2025 Form 1120-SN computes PTET at 5.20% (line 5 x .0520); the 2026 PTET rate was not verified. | $9,000 | — | SUTA · Entity tax |
| Nevada | Nevada has no corporate or personal income tax, so there is no S-corp-specific entity tax. Commerce Tax (not S-corp-specific; applies to most business entities incl. corporations, partnerships, sole proprietorships) is imposed only on businesses whose Nevada gross revenue exceeds $4,000,000 in a fiscal year (July 1-June 30), at an industry rate applied to Nevada gross revenue in excess of $4M; return due 45 days after June 30 (Aug 14, 2026 for FY 2025-26). Rates by NAICS category (Commerce Tax return EXC-F025): agriculture 0.063%; mining 0.051%; utilities/telecom 0.136%; construction 0.083%; manufacturing 0.091%; wholesale 0.101%; retail 0.111%; air transportation 0.058%; truck transportation 0.202%; rail 0.331%; other transportation 0.129%; warehousing 0.128%; publishing/software/data processing 0.253%; finance & insurance 0.111%; real estate & rental 0.250%; professional, scientific & technical services 0.181%; management of companies 0.137%; administrative & support 0.154%; waste management 0.261%; educational services 0.281%; health care & social assistance 0.190%; arts/entertainment/recreation 0.240%; accommodation 0.200%; food services & drinking places 0.194%; other services 0.142%; unclassified 0.128%. 50% of Commerce Tax paid may be credited against the Modified Business Tax. A typical small S corp (< $4M NV revenue) owes no Commerce Tax. See other_employer_payroll_taxes for the Modified Business Tax (payroll tax). | $43,700 | 2.95% | SUTA · Entity tax Re-verifying |
| New Hampshire | Business Profits Tax (BPT): 7.5% for taxable periods ending on or after 12/31/2023 (7.6% for periods ending on/after 12/31/2022). NH does not recognize S status for BPT: DRA FAQ says Sub-S corporations 'are treated the same as C Corporations', with Schedule K flow-through items included in taxable business profits. BPT filing threshold: gross business income in excess of $109,000 for taxable periods beginning on or after 1/1/2025 (thresholds are adjusted biennially for inflation; this applies to 2025-2026 periods; previously $103,000 for 2023-2024). Business Enterprise Tax (BET): 0.55% of the enterprise value tax base (all compensation paid or accrued, interest paid or accrued, and dividends paid, after adjustments and apportionment) - so the owner's W-2 salary is itself part of the BET base. BET filing threshold for taxable periods beginning on or after 1/1/2025: gross receipts in excess of $298,000 OR enterprise value tax base greater than $298,000 (previously $281,000). BET paid generates a credit usable against BPT; unused BET credit (periods ending on/after 12/31/2014) carries forward 10 years. Both taxes apply to S corporations. | $14,000 | 1.7%–2.7% | SUTA · Entity tax Re-verifying |
| New Jersey | New Jersey S corporations file the Corporation Business Tax return CBT-100S and pay the S corporation minimum tax based on New Jersey gross receipts (Schedule A-GR). Official table (tax year 2007 forward): NJ gross receipts less than $100,000 = $375.00; $100,000 or more but less than $250,000 = $562.50; $250,000 or more but less than $500,000 = $750.00; $500,000 or more but less than $1,000,000 = $1,125.00; $1,000,000 or more = $1,500.00. Exception: if the S corp is a member of an affiliated or controlled group (IRC 1504 or 1563) with total group payroll of $5,000,000 or more for the return period, the minimum tax is $2,000. Short periods (under 12 months) are subject to the higher minimum if prorated total payroll exceeds $416,667 per month. No CBT rate applies to S corporation entire net income that is not subject to federal income tax; entire net income that IS subject to federal income tax (e.g., built-in gains) is taxed at CBT rates (up to 9%). Note: the official NJ table shows $1,125 (not $938) for the $500,000-$1,000,000 tier. Optional: eligible S corporations may make an annual election to pay the NJ Pass-Through Business Alternative Income Tax (BAIT/PTE) at the entity level (elective, not a mandatory entity tax). | $44,800 | 2.6825% | SUTA · Entity tax |
| New Mexico | New Mexico corporate franchise tax of $50 per year applies to every domestic and foreign corporation, including S corporations, that engages in business in NM or exercises its corporate franchise in NM (even if not actively doing business). S corporations report it on Form S-Corp (New Mexico Sub-Chapter S Corporate Income and Franchise Tax Return). No entity-level income tax on a typical S corp's pass-through income. Optional: a pass-through entity (including an S corp) may elect annually to pay entity-level tax for certain owners by completing the entity-level tax section of its S-Corp return. S corps must also withhold NM tax on nonresident owners' allocable net income (reported on the S-Corp return from tax year 2023). | $34,800 | 1%–1.21% | SUTA · Entity tax |
| New York | New York State: a New York S corporation (Article 9-A) pays only the fixed dollar minimum (FDM) tax based on New York receipts (Form CT-3-S). FDM for all NY S corporations (except qualified NY manufacturers / qualified emerging technology companies): NY receipts not more than $100,000 = $25; >$100,000 to $250,000 = $50; >$250,000 to $500,000 = $175; >$500,000 to $1,000,000 = $300; >$1,000,000 to $5,000,000 = $1,000; >$5,000,000 to $25,000,000 = $3,000; over $25,000,000 = $4,500. Qualified NY manufacturers / QETCs: $19 / $38 / $131 / $225 / $750 / $2,250 / $3,375. The MTA surcharge does not apply to a New York S corporation. A federal S corp that does NOT make the NY S election (Form CT-6) is taxed like a C corporation under Article 9-A. Optional: NY S corps may make an annual election to pay the NY Pass-Through Entity Tax (PTET) (elective). NEW YORK CITY: NYC does not recognize the S election; S corporations doing business in NYC pay the NYC General Corporation Tax (see local_note) in addition to the state FDM. | $17,600 | 4.1% | SUTA · Entity tax |
| North Carolina | North Carolina franchise tax applies to S corporations (reported on Form CD-401S). For S corporations (tax years beginning on or after January 1, 2019): $200 for the first $1,000,000 of the corporation's franchise tax base, plus $1.50 per $1,000 (0.15%) of tax base exceeding $1,000,000; minimum franchise tax $200. (C corporations: $1.50 per $1,000 with a maximum of $500 on the first $1,000,000, minimum $200.) Holding companies are capped at $150,000. No entity-level income tax on a typical S corp's pass-through income (NC offers an optional elective taxed pass-through entity regime). | $34,200 | 1% | SUTA · Entity tax |
| North Dakota | None | $46,600 | — | SUTA · Entity tax |
| Ohio | None | $9,000 | 2.7% | SUTA · Entity tax Re-verifying |
| Oklahoma | None | $25,000 | 1.5% | SUTA · Entity tax |
| Oregon | Oregon DOR: an S corporation doing business in Oregon (an excise tax filer) must pay a $150 minimum excise tax. The minimum tax does not flow through to shareholders. S corporation income tax filers (not doing business in Oregon but with Oregon-source income) are not subject to the minimum tax. On the DOR page the S corporation minimum is a flat $150. The tiered minimum-tax table based on Oregon sales ($150 up to $100,000) is shown for C corporations and was not captured or verified here, so it is left out on purpose. The S corporation is also taxed at the entity level on built-in gains and excess net passive income when those are taxed on the federal return, at the corporate calculated-tax rates: 6.6% of Oregon taxable income up to $1 million, and $66,000 plus 7.6% of the excess over $1 million. The greater of calculated tax or the minimum applies. Optional Pass-Through Entity Elective (PTE-E) tax, elected annually on Form OR-21: 9% on the first $250,000 of distributive proceeds and 9.9% above $250,000. SB 1510 (2026 session) extended PTE-E through tax years beginning before January 1, 2028. Separately, the Oregon Corporate Activity Tax (CAT, ORS 317A) applies to all entity types, not only S corporations: $250 plus 0.57% of taxable Oregon commercial activity over $1 million, after a 35% subtraction for certain expenses. Registration is required above $750,000, and filing and payment above $1 million. | $56,700 | 2.4% | SUTA · Entity tax Re-verifying |
| Pennsylvania | None | $10,000 | — | SUTA · Entity tax |
| Rhode Island | RI Division of Taxation: pass-through entities, which by statute include corporations treated as S corporations under IRC 1362(a), must file a return reporting entity-level income. All of them except general partnerships owe a tax or fee equal to the corporate minimum tax, currently $400. Pass-through entities use three-factor apportionment. Nonresident shareholders: withholding at the highest rate (5.99% individuals / 7% corporations) under RIGL 44-11-2.2, unless a composite return (RI-1040C) or the entity-level election applies. Optional entity-level (PTE) election on Form RI-PTE: tax paid at 5.99%, with owners getting a credit. Under the FY2027 budget (H 7127 Sub A), for tax years beginning on or after 1/1/2027 an electing PTE may also pay the new High-Income Surtax at the entity level. The surtax applies to income over $1 million: 1% in 2027, 2% in 2028, 3% from 2029. | $30,800 | 1.21% | SUTA · Entity tax |
| South Carolina | SC annual corporate License Fee applies to S corporations: 0.1% ($1 per $1,000) of capital and paid-in surplus, plus $15, with a minimum of $25 a year. It is due with the SC1120S return or extension and applies to the tax year after the income tax year. A new corporation also pays a one-time $25 initial License Fee with the Initial Annual Report (CL-1) within 60 days of doing business in SC. Income: the S corporation is not taxed on ordinary pass-through income. SCDOR states a 5% corporate income tax on SC taxable income taxed at the S corporation level (e.g., built-in gains). Optional Active Trade or Business Income (ATBI) election, made annually on the SC1120S and computed on the I-435: active trade or business income is taxed at the entity level at a flat 3% instead of at the shareholder level. The corporation must withhold 5% of the SC taxable income of nonresident shareholders (SC1120S-WH), unless they are in a composite return or file an I-309 affidavit. | $14,000 | 1.06% | SUTA · Entity tax |
| South Dakota | None | $15,000 | — | SUTA · Entity tax |
| Tennessee | Tennessee franchise & excise (F&E) taxes apply to S corporations and LLCs the same way they apply to C corporations. The S election gives no pass-through relief for F&E. Excise tax is 6.5% of Tennessee taxable income. The calculation starts from federal net income (e.g., Form 1120S) before loss carryover and special deductions, so a reasonable salary paid to the owner-employee is deductible and lowers the excise base. Franchise tax is 0.25% ($0.25 per $100) of net worth (assets minus liabilities) apportioned to Tennessee, with a $100 minimum. SB2103/HB1893 (2024) repealed the franchise tax property measure (Schedule G 'minimum measure') for tax years ending on or after Jan 1, 2024, so franchise tax is now based on net worth only (Schedule F). The $100 in minimum_usd is the franchise tax minimum. Tennessee has no personal income tax on wages or S-corp income, and the Hall tax on dividends and interest no longer applies. Tennessee has no elective PTE tax, since there is no individual income tax to offset. | $7,000 | 2.7% | SUTA · Entity tax Re-verifying |
| Texas | The Texas franchise (margin) tax applies to every taxable entity formed or doing business in Texas. The Comptroller lists corporations, S corporations, LLCs (including single-member and series LLCs) and partnerships, so the S election gives no relief. For report years 2026 and 2027, the No Tax Due Threshold is $2,650,000 of total revenue (it was $2,470,000 for 2024-2025). At or below the threshold, no tax is due and no franchise tax report is filed (effective with reports due in 2024); the entity files only a Public Information Report or Ownership Information Report. Above the threshold, the rate is 0.75% (0.375% for retail/wholesale) of taxable margin, apportioned to Texas by gross receipts. Taxable margin is the smallest of: 70% of total revenue; revenue minus COGS; revenue minus compensation (compensation deduction limit $480,000 per person); or revenue minus $1 million. The EZ computation is available for total revenue up to $20 million: 0.331% of apportioned revenue. There is no minimum tax. Texas has no personal income tax, so the S election does not change Texas tax. | $9,000 | 2.7% | SUTA · Entity tax |
| Utah | None | $50,700 | 1.2%–7.1% | SUTA · Entity tax Re-verifying |
| Vermont | Vermont follows federal S status. Under 32 V.S.A. 5911, an S corporation is not subject to the corporate income tax except on income that is taxable to the corporation under the Internal Revenue Code, such as built-in gains. Income passes through to shareholders. Under 32 V.S.A. 5915, every S corporation required to file a Vermont return pays an annual minimum tax (business entity tax) of $250, due with the return. LLCs taxed as partnerships pay the same $250 (32 V.S.A. 5921), so S corps and multi-member LLCs owe the same fixed amount. 32 V.S.A. chapter 151 has no elective pass-through-entity tax subchapter. | $15,400 | — | SUTA · Entity tax |
| Virginia | None | $8,000 | 2.5% | SUTA · Entity tax Re-verifying |
| Washington | Washington has no corporate or personal income tax in 2026, so S-corp status has no Washington income-tax effect. The state business & occupation (B&O) tax is a gross receipts tax on ALL business entities: corporations, S corps, LLCs and sole proprietors alike. It is NOT S-corp-specific and does not change with an S election. Rates by classification (current DOR table): Service & other activities are 1.5% if prior-year service income was under $1,000,000, 1.75% for $1,000,000-$4,999,999.99, and 2.1% for $5,000,000 or more. These tiers took effect Oct 1, 2025 under ESSB 2081; hospitals and select advanced computing businesses stay at 1.5%. Retailing is 0.471%, wholesaling 0.484% and manufacturing 0.484%. rate_percent shows the 1.5% small-business service rate. The Small Business B&O Tax Credit reduces or eliminates tax for low-revenue businesses (maximum $160/month for businesses reporting 50% or more under service & other activities; $55/month for others). From Jan 1, 2026, a 0.5% surcharge applies to Washington taxable income over $250 million (expires Dec 31, 2029). Future change: SB 6346 (2026) enacts a 9.9% individual income tax on AGI over $1 million starting Jan 1, 2028 (first returns due April 2029). It is not in effect for 2026. | $78,200 | 1%–null% | SUTA · Entity tax |
| West Virginia | None | — | — | SUTA · Entity tax Re-verifying |
| Wisconsin | None | $14,000 | 2.5%–3.25% | SUTA · Entity tax |
| Wyoming | None | $33,800 | — | SUTA · Entity tax Re-verifying |
How does the S-corp calculator compare the two?
It runs a full 2026 federal estimate twice, once for each scenario, and adds up every cost that changes:
- Sole proprietor or single-member LLC: self-employment tax of 15.3% on 92.35% of profit (Social Security part capped at the $184,500 wage base), plus federal income tax after the deduction for half of SE tax and the QBI deduction.
- S corporation: Social Security and Medicare on your salary only (7.65% from you and 7.65% from the company); federal unemployment tax at 0.6% on the first $7,000; state unemployment tax at the rate and wage base shown; any extra state entity-level tax you enter; your payroll and accounting costs; and federal income tax on your salary plus the remaining profit (K-1 income). QBI is recalculated using the S corp's W-2 wages.
- Net saving = sole-prop total − S-corp total. Below $1,500 a year, we say "probably not worth it yet". That is our judgment call, since the election adds paperwork and payroll deadlines.
- Break-even profit is the lowest profit, in $1,000 steps, at which the S corp saves money, keeping your salary at the same share of profit.
State entity-level taxes are not estimated automatically. Some states tax S corporations directly (for example a percentage of net income or a minimum tax), but many state taxes are based on receipts, net worth or capital, or apply to LLCs and sole proprietors as well, so they are not an extra cost of the election. The state table above shows each state's rule. Enter any extra amount yourself.
Not included: state personal income tax, health insurance and retirement-plan differences, local taxes (for example New York City's tax on S corporations), and payroll-tax credits. The federal estimate also excludes capital gains, NIIT and AMT.
Worked examples
Single filers, no other income; payroll service $600 and extra accounting $1,000 a year (example inputs, not RAHA prices); new-employer SUTA rates; no extra state entity-level tax entered. Produced by this calculator.
| Situation | Sole prop total | S corp total | Net saving | Break-even profit |
|---|---|---|---|---|
| Freelancer in Texas, $60,000 profit, $30,000 salary | $12,037 | $10,374 | $1,663 | $28,000 |
| Consultant in Florida, $120,000 profit, $60,000 salary | $28,462 | $24,811 | $3,651 | $28,000 |
| Designer in California, $150,000 profit, $70,000 salary | $37,608 | $32,095 | $5,513 | $26,000 |
These examples are generated by running this calculator's own code with the figures on this page, so they always match what the tool shows.
Frequently asked questions
At what income does an S corp make sense?
There's no single number. It depends on the salary you must pay, your state, and your payroll and accounting costs. Many owners see little or no saving at lower profits, because payroll costs eat the SE-tax saving. Use the break-even figure above for your own inputs.
How much salary do I have to pay myself?
A "reasonable" salary for the work you do, before you take distributions. The IRS looks at your duties, time spent and what similar businesses pay. There is no official percentage. A 35–60% range is only a starting point for the calculator.
Does an S corp reduce income tax?
Not directly. The saving is mainly in Social Security and Medicare taxes on profit above your salary. Income tax can even rise slightly, because you lose the deduction for half of self-employment tax and the QBI deduction changes.
What extra costs come with an S corp?
Payroll processing, federal and state unemployment taxes, quarterly payroll filings, a separate Form 1120-S return, and in some states entity-level or franchise taxes. The calculator includes each one you enter or that our state table covers.
When is the deadline to elect S-corp status?
File Form 2553 no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year. (Calendar-year corporation for 2027: by March 15, 2027.) Late-election relief: Rev. Proc. 2013-30.
Is the QBI deduction lower with an S corp?
It can be. Your salary is not qualified business income, so the QBI base shrinks. At higher incomes, though, the W-2 wages the S corp pays can help you keep the deduction. The calculator models both effects.
Disclaimer: This tool provides general estimates for educational purposes and is not tax, legal or accounting advice. Results depend on facts not captured here. Consult a qualified professional before acting.
Sources
- law.cornell.edu: https://www.law.cornell.edu/uscode/text/26/1401
- ssa.gov: https://www.ssa.gov/oact/cola/cbb.html
- irs.gov: https://www.irs.gov/pub/irs-pdf/p15.pdf
- irs.gov: https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- irs.gov: https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues
- irs.gov: https://www.irs.gov/pub/irs-pdf/i2553.pdf
