| Salary | Distribution | Total Tax | Savings vs LLC |
|---|---|---|---|
| $36,000 (30%) | $84,000 | $20,053 | +$7,998 |
| $48,000 (40%) | $72,000 | $22,417 | +$5,634 |
| $60,000 (50%) | $60,000 | $24,781 | +$3,270 |
| $72,000 (60%) | $48,000 | $27,145 | +$906 |
| $84,000 (70%) | $36,000 | $29,509 | -$1,458 |
| $96,000 (80%) | $24,000 | $31,875 | -$3,823 |
LLC (Sole Proprietorship): All net profit is subject to self-employment tax (15.3% on the first $168,600 for SS + 2.9% Medicare on all earnings). You can deduct 50% of SE tax from your adjusted gross income.
S-Corp: You pay yourself a W-2 salary, and payroll taxes (15.3%) only apply to that salary. The remaining profit passes through as a distribution, which avoids payroll tax entirely.
QBI Deduction: The Qualified Business Income deduction allows a 20% deduction on qualifying business income, subject to income thresholds and other limitations.
Disclaimer: This calculator provides estimates for educational purposes. State taxes, local taxes, credits, and many other factors are not included. Always consult a CPA or tax professional.