No FICA (if owner is not employee of S-corp, uncommon)
15.3% (Social Security & Medicare for employees)
2.9% (Medicare only for high earners if applicable)
7.65% (Half of FICA, employer portion)
Yes
No
Understanding S Corp Taxes and This Calculator
An S Corporation (S Corp) is a special tax designation for a business that allows profits and losses to be passed through directly to the owners' personal income without being subject to corporate tax rates. This avoids the "double taxation" often associated with C Corporations. However, S Corps are not tax-free entities. Owners who work for the company must pay themselves a "reasonable salary," which is subject to payroll taxes (like FICA). The remaining profits can be distributed as dividends, which are generally not subject to FICA or self-employment taxes.
How the S Corp Tax Rate Calculator Works
This calculator estimates the total tax burden on your S Corp's net income, considering various federal and state taxes. It breaks down the calculation as follows:
Business Net Income: This is the profit your business generates after paying a reasonable salary to owner-employees. This is the amount available for distributions and subject to pass-through income tax.
Federal Income Tax: Calculated by applying your specified federal income tax bracket percentage to the Business Net Income. This represents the tax on the profit distributions.
State Income Tax: Calculated by applying your specified state income tax rate to the Business Net Income. This is the tax on profit distributions at the state level.
FICA Taxes (Social Security & Medicare): If an owner-employee is paid a salary, this tax is typically levied on that salary. However, this calculator focuses on the pass-through income and assumes the salary portion has already been accounted for and is outside the "Business Net Income" input. If you select "No FICA" and your business income is indeed pass-through distributions, you might consider self-employment taxes. The calculator uses the FICA Tax Rate input to represent the employee's portion of FICA taxes that would normally be withheld from their salary, but applied here conceptually to a portion of income if deemed appropriate by your tax advisor. For most active S-corp owner-employees, the salary is subject to FICA, and distributions are not. This calculator models tax on distributions.
Self-Employment Tax: This tax covers Social Security and Medicare for self-employed individuals who are not considered employees receiving a W-2. If you've selected "No FICA" and chosen to apply SE Tax, this calculator will apply the SE tax rate to the Business Net Income. Note that self-employment tax is calculated on 92.35% of net earnings from self-employment. The calculator simplifies this by applying the rate directly to the income figure.
Important Considerations for S Corps:
Reasonable Salary: The IRS requires owner-employees to take a "reasonable salary." This is crucial for avoiding penalties. The "Business Net Income" in this calculator is the amount after this salary has been paid.
Pass-Through Taxation: Profits (after salary and expenses) are taxed at the owner's individual income tax rate, not a corporate rate.
Distributions vs. Salary: Distributions are generally not subject to FICA or self-employment taxes, making S Corp status attractive for tax savings compared to sole proprietorships or partnerships, provided a reasonable salary is paid.
Complexity: S Corp taxation can be complex. This calculator provides an estimate. Always consult with a qualified tax professional or CPA for advice tailored to your specific business situation.
Example Scenario
Let's say your S Corp has $150,000 in net income after paying yourself a reasonable salary of $80,000 (which was subject to payroll taxes).
Federal Tax Bracket: 21%
State Tax Rate: 5%
FICA Tax Rate: We'll set this to "No FICA" (0%) for this example as we are focusing on the distribution tax.
Apply SE Tax: Yes
Self-Employment Tax Rate: 15.3%
Calculation:
Federal Tax on Distributions: $150,000 * 21% = $31,500
State Tax on Distributions: $150,000 * 5% = $7,500
Self-Employment Tax: $150,000 * 15.3% = $22,950
Total Estimated Taxes on Distributions: $31,500 + $7,500 + $22,950 = $61,950
This example illustrates how taxes are applied to the profits distributed to owners, separate from the taxes on their salary.
function formatCurrency(amount) {
return "$" + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$1,');
}
function calculateSCorpTaxes() {
var businessIncome = parseFloat(document.getElementById("businessIncome").value);
var federalTaxBracket = parseFloat(document.getElementById("federalTaxBracket").value);
var stateTaxRate = parseFloat(document.getElementById("stateTaxRate").value);
var ficaTaxRate = parseFloat(document.getElementById("ficaTaxRate").value);
var selfEmploymentTax = document.getElementById("selfEmploymentTax").value;
var seTaxRate = parseFloat(document.getElementById("seTaxRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(businessIncome) || businessIncome < 0 ||
isNaN(federalTaxBracket) || federalTaxBracket < 0 ||
isNaN(stateTaxRate) || stateTaxRate < 0 ||
isNaN(seTaxRate) || seTaxRate 0, it implies a salary component is being considered conceptually,
// but we are calculating taxes on 'businessIncome' which is profit distributions.
// To avoid double-counting if FICA is selected AND SE tax is applied to distributions,
// we will only calculate SE tax if FICA is 0 or if SE Tax is explicitly selected.
if (selfEmploymentTax === 'yes' && ficaTaxRate === 0) {
// Self-Employment Tax calculation: Typically on 92.35% of net earnings.
// For simplicity in this calculator, we apply the rate directly to business income.
// A more complex model would factor in the 92.35% adjustment.
selfEmploymentTaxAmount = (businessIncome * seTaxRate) / 100;
} else if (ficaTaxRate > 0) {
// This scenario is less common for 'businessIncome' which is distributions.
// If FICA is selected, it usually applies to salary, not these profits.
// We'll report it as a separate component if the user selected a FICA rate other than 0.
ficaTaxAmount = (businessIncome * ficaTaxRate) / 100;
}
totalTaxes = federalTaxAmount + stateTaxAmount + selfEmploymentTaxAmount + ficaTaxAmount;
resultDiv.innerHTML = "Estimated Total Taxes on Distributions: " + formatCurrency(totalTaxes) +
"" +
"Breakdown:" +
"Federal Income Tax: " + formatCurrency(federalTaxAmount) + "" +
"State Income Tax: " + formatCurrency(stateTaxAmount) + "" +
(selfEmploymentTaxAmount > 0 ? "Self-Employment Tax: " + formatCurrency(selfEmploymentTaxAmount) + "" : "") +
(ficaTaxAmount > 0 ? "FICA Tax (Conceptual): " + formatCurrency(ficaTaxAmount) + "" : "");
}