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Tax Comparison for Entity Type Selection
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Sole Proprietorship EarningsS Corporation Earnings
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Net Earnings$225,000
Net Earnings before owner's salary
$225,000
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SE income subject to SE tax
$207,788Owner's Salary$55,000
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Distribution to owner
$170,000
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TaxesTaxes
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Wage BaseRateTax paidWage BaseRateTax paid
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2024 Social Security
168,60012.40%$20,906
2024 Social Security
168,60012.40%$6,820
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2024 Medicare
N/A2.90%$6,026
2024 Medicare
N/A2.90%$1,595
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Total Payroll Taxes
$26,932
Total Payroll Taxes
$8,415
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Total Federal Income Taxes
$33,760
Total Federal Income Taxes
$39,134
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Total Taxes
$60,692Total Taxes$47,549
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Qualified Business Income (QBI)Qualified Business Income (QBI)
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QBI deduction before income limitation
$42,307
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Taxable Income before QBI deduction
$48,147
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QBI Deduction (lessor of above two amounts)
 42,307 QBI 33,159
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Total Tax Savings
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Sole Proprietor Total Taxes
$60,692
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- S Corporation Total Taxes
$47,549
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Tax Savings$13,143
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- Estimated cost for separate tax return
$2,000
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- Estimated cost for payroll processing
$1,200
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Total Estimated Net Savings
$9,943
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Federal Tax Rates:
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 - 23,200 10% 2,320.00
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 23,201 94,300 12% 8,531.88
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 94,301 201,050 22% 23,484.78
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 201,051 383,900 24% 43,883.76
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 383,901 487,450 32% 33,135.68
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 487,451 731,200 35% 85,312.15
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 731,201 37%
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 Sole Proprietorship - Federal Tax: S Corporation - Federal Tax:
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Income$225,000Income, incl. wages$225,000
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SE Tax Ded
 (13,466)SE Tax Ded -
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Standard Deduction
 29,200
Standard Deduction
 29,200
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QBI (42,307)QBI (33,159)
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Taxable Income
$198,427Taxable Income$221,042
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Federal Tax:
Federal Tax:
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10% 2,320 10% 2,320