S-Corp or LLC — which saves me more tax?

Self-employment tax as a sole-member LLC versus an S-Corp with a reasonable salary — including the SS wage cap and compliance costs.

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LLC self-employment tax
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S-Corp payroll + Medicare
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Tax savings (before compliance)
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Net savings after compliance
What is the difference?A single-member LLC pays 15.3% self-employment (SE) tax on ALL net profit (12.4% SS + 2.9% Medicare). An S-Corp pays SE tax only on your W-2 salary; remaining profit is a distribution free of SE tax — but a 'reasonable salary' is mandatory and payroll runs costs ~$1-3k/yr.
How does the SS wage base matter?2025's Social Security wage cap is $176,100. Above it the 12.4% SS piece stops for the year — so at very high profit the S-Corp advantage shrinks (only the 2.9% Medicare differential remains). The tool respects the cap.
What is a reasonable salary?Whatever comparable W-2 employees earn for the same work — the IRS and courts strike down salaries that are too low to dodge SE tax. Use an industry figure, not zero, or the savings (and the tool) become fiction.
What about the QBI (199A) deduction?Both structures generally qualify; S-Corp reasonable-salary rules interact with it. This tool isolates the SE-tax decision — the lever that usually drives the S-Corp choice.