Sole Proprietor Versus S Corporation Tax by Income
At $100,000 of business net income, the 2026 GlacialBooks model puts total S corporation tax $3,745 lower than sole proprietor tax when owner wages equal 50 percent of business income. This is a modeled planning estimate, not measured customer data.
| Business net income | Sole proprietor total tax | S corporation total tax | C corporation total tax | Employment tax difference |
|---|---|---|---|---|
| $50,000 | $9,732 | $7,045 | $12,928 | $3,240 |
| $75,000 | $15,495 | $11,758 | $20,376 | $4,860 |
| $100,000 | $22,365 | $18,620 | $27,895 | $6,480 |
| $150,000 | $37,608 | $32,609 | $43,783 | $9,719 |
| $250,000 | $66,954 | $65,858 | $78,922 | $10,726 |
Methodology
Each row runs the same business net income through the published GlacialBooks income tax estimator. The table uses federal brackets, the standard deduction, employment taxes, the qualified business income planning method, the corporate rate, and the illustrative dividend layer from the versioned 2026 data file.
- The filing status is single, other household income is zero, and the standard deduction is used.
- Texas is selected so no broad state individual income tax is added. State business taxes are outside this model.
- S corporation and C corporation owner wages equal 50 percent of business net income. A reasonable salary depends on the actual work and facts.
- All remaining corporate profit is distributed. The C corporation dividend layer uses the documented 15 percent planning rate.
- Credits, retirement contributions, health insurance treatment, other payroll costs, additional taxes, losses, and many situational factors are not included.
Questions about the benchmark
Does this prove an S corporation always saves tax?
No. The result depends on income, salary, filing status, deductions, state rules, payroll costs, and other facts. The table shows one consistent modeled comparison.
Why is owner salary set to 50 percent?
The benchmark needs one repeatable assumption across income levels. Fifty percent is an illustration, not a reasonable compensation conclusion for any business.
Does the table include state tax?
No broad state individual income tax is included because the model selects Texas. Texas business taxes and all other state specific obligations remain outside the table.
Sources
Reviewed 2026-07-20.
These figures are modeled estimates for planning, not measured customer results. They are general information and are not accounting, tax, or legal advice.