S-Corp Tax Savings Calculator
Estimate how much you could save on self-employment taxes by electing S-Corp status for your medical practice.
Your Practice Numbers
Enter your current practice financials. All calculations happen in your browser — nothing is stored or sent anywhere.
Your practice revenue minus all business expenses (before owner compensation)
Your approximate state income tax rate (e.g., NY ~6-9%, FL/TX = 0%)
Your Estimated Savings
Enter your practice numbers and click "Calculate My Savings" to see your estimated S-Corp tax savings.
The Basics in 60 Seconds
Without S-Corp
As a sole proprietor or single-member LLC, you pay 15.3% self-employment tax on your entire net income (Social Security 12.4% + Medicare 2.9%).
With S-Corp
You pay yourself a "reasonable salary" (W-2) and take the rest as distributions. Payroll taxes only apply to the salary portion — not the distributions.
The Savings
The difference between self-employment tax on your full income vs. payroll taxes on just the salary portion is your annual tax savings.
Important Considerations
- S-Corp election isn't right for every practice. If your net income is below $80,000, the administrative costs may outweigh the savings.
- Your "reasonable salary" must be defensible. Setting it too low risks IRS penalties. We use specialty-specific salary data to determine the right number.
- S-Corp requires payroll setup, quarterly payroll tax filings, and an annual 1120-S return. Budget approximately $2,000-$4,000/year in additional compliance costs.
- State tax implications vary significantly. Some states don't recognize S-Corp election or have additional franchise taxes.
- This calculator shows self-employment tax savings only. Your total tax picture includes income tax, state tax, retirement plan contributions, and other deductions.
- Retirement plan contributions (Solo 401(k), Safe Harbor) interact with S-Corp salary decisions. Higher salary means higher plan contribution limits.
S-Corp Questions for Medical Practice Owners
How do I know if S-Corp election makes sense for my practice?
Generally, S-Corp makes sense when your net practice income consistently exceeds what you'd pay yourself as a reasonable W-2 salary — typically around $80,000-$100,000+ in net income. The savings come from avoiding self-employment tax on the distribution portion. Below that threshold, the additional compliance costs ($2,000-$4,000/year for payroll and 1120-S filing) can eat into or exceed the savings.
What counts as "reasonable compensation" for a medical practice owner?
The IRS requires S-Corp owners who provide services to pay themselves a reasonable W-2 salary before taking distributions. For medical practice owners, "reasonable" is based on your specialty, geographic area, hours worked, and responsibilities. Common references include MGMA compensation data, BLS statistics, and comparable salary surveys. A solo dermatologist in New York might have a different reasonable salary than a family practice owner in Ohio. The key is documentation — you need to be able to defend the number if questioned.
What are the ongoing costs of running an S-Corp?
Running an S-Corp adds several compliance requirements: payroll processing ($50-$150/month), quarterly payroll tax filings (940, 941), annual 1120-S corporate tax return ($750-$2,000), W-2 and W-3 filings, and potentially state-level franchise taxes or fees. Total additional annual cost typically runs $2,000-$4,000. These costs should be weighed against the estimated tax savings — which is why S-Corp doesn't make sense at lower income levels.
How does S-Corp salary affect my retirement plan contributions?
Your retirement plan contributions are typically based on your W-2 salary (not total S-Corp income). With a Solo 401(k), you can contribute up to $24,500 as an employee deferral (2026) plus 25% of your W-2 salary as an employer contribution — up to a combined $72,000. Setting your salary too low to maximize SE tax savings can limit your retirement contributions. This is why S-Corp salary optimization requires balancing payroll tax savings against retirement plan contribution opportunities. A qualified CPA can model the optimal salary level for your situation.
Ready for a Real Analysis?
This calculator gives you a ballpark. A personalized analysis considers your full tax picture — retirement plans, state taxes, deductions, and entity structure. Let's talk.
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