S Corp vs LLC Tax Differences Explained: 2026 Guide
S corp vs LLC tax differences explained with 2026 numbers: payroll tax savings, reasonable salary, the QBI trade-off, and when to elect it.
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Free calculators and straight answers for your 2026 taxes.
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Quick answer
What is self-employment tax?
Self-employment tax is the 15.3% federal tax paid by self-employed individuals and 1099 contractors to fund Social Security (12.4%) and Medicare (2.9%). Unlike W2 employees who split this with their employer, self-employed taxpayers pay the full 15.3% themselves on 92.35% of net self-employment earnings. For 2026, the Social Security portion applies only to the first $184,500 of those earnings. The Medicare portion applies to all of them, with an additional 0.9% above $200,000 (single) or $250,000 (married filing jointly). You can deduct half of your self-employment tax on Form 1040, which lowers your adjusted gross income. An S-Corporation can reduce the tax by paying you a reasonable salary and taking the rest as distributions; our S-Corp Tax Savings Calculator shows how much you could save. Source: IRS SE Tax Guide.
- 2026 Social Security wage base
- $184,500
- Combined SE tax rate
- 15.3%
- Additional Medicare tax above
- $200,000 single