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Business Income
Step 1 of 3
Business Structure (Entity Type)
Deductions & Credits
Step 2 of 3
Common Deductions
Business Tax Credits
State Tax
Step 3 of 3
Note: This is an estimate for informational purposes. S-Corp savings assume "reasonable salary" is set appropriately. C-Corp double taxation is simplified. State business taxes vary widely (franchise tax, LLC fees, etc.). Consult a CPA for your specific situation.
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Frequently Asked Questions
Sole Prop / Single-member LLC: All business income flows through to your personal return. You pay self-employment tax (15.3% on net earnings) plus income tax. The full net profit is subject to SE tax.
S-Corp: You pay yourself a "reasonable salary" (subject to SE tax) and the remaining profit passes through as distributions (NOT subject to SE tax). This can save significant SE tax on larger profits, but requires payroll and more complex filing.
S-Corp: You pay yourself a "reasonable salary" (subject to SE tax) and the remaining profit passes through as distributions (NOT subject to SE tax). This can save significant SE tax on larger profits, but requires payroll and more complex filing.
Qualified Business Income (QBI) deduction (Section 199A) allows pass-through entities (sole props, LLCs, S-Corps) to deduct up to 20% of their qualified business income. For 2026, it phases out for single filers with taxable income above $191,950 and MFJ above $383,900. Specified service trades or businesses may have additional limitations.
Reasonable salary is a gray area — IRS requires the salary to be "reasonable" for the services performed. There's no fixed formula, but courts have looked at factors like qualifications, time spent, and comparable salaries. A common approach: pay yourself the greater of (a) 40-50% of net income or (b) a market-rate salary for your role. Consult a CPA to determine the right amount for your situation.
No. This calculator provides estimates for educational purposes only. Business tax situations are highly individual. Tax laws change, and your specific circumstances (industry, deductions, credits, state rules) can significantly affect your actual tax liability. Always consult a qualified CPA or tax professional.