LLC Tax Savings Calculator
How much can an LLC save you on taxes? This calculator compares your current tax burden as a sole proprietor vs. an LLC with S-Corp election — showing the real dollar savings.
LLC Tax Savings Calculator
Compare tax liability across entity types to find your optimal structure
Switching from Sole Prop to LLC + S-Corp could save $4,518/year. FICA is only paid on the 60% salary ($72,000), not the full $120,000.
Disclaimer: Sole proprietorships and single-member LLCs (disregarded entities) pay SE tax on all net income. LLCs with S-Corp election pay FICA only on reasonable salary (assumed 60% here). Does not include additional S-Corp costs: payroll processing ($500–$1,500/yr), state filing fees, or potential state-level taxes. Consult a CPA before changing entity type.
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Frequently Asked Questions
How much does an LLC save on taxes?+
A basic LLC (single-member) saves $0 on taxes — the IRS treats it identically to a sole proprietorship. The savings come from S-Corp election: on $120k net income, S-Corp saves approximately $8,000-12,000/year in SE tax by paying salary on 50-60% and taking the rest as distributions.
What are the costs of running an LLC with S-Corp election?+
Annual costs: state filing fees ($50-800/year), payroll processing ($500-1,500/year), additional tax return ($500-1,500/year), and registered agent ($100-300/year). Total: $1,150-$4,100/year. Net savings after costs: $4,000-$10,000/year on $100k+ income.
When should I elect S-Corp taxation for my LLC?+
When your net self-employment income consistently exceeds $60,000-$80,000/year. Below that, the costs of S-Corp compliance (payroll, extra tax return) eat up most of the savings. Above $80k, the SE tax savings significantly outweigh the costs.
How much does an LLC save on taxes?
A basic LLC (single-member) saves $0 on taxes — the IRS treats it identically to a sole proprietorship. The savings come from S-Corp election: on $120k net income, S-Corp saves approximately $8,000-12,000/year in SE tax by paying salary on 50-60% and taking the rest as distributions.