C-Corp vs S-Corp Tax Calculator 2026
Compare C-Corp double taxation (21% corporate + dividend tax) vs S-Corp pass-through β find your total tax under each structure and the optimal choice.
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Quick:
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Must be reasonable compensation (IRS requirement)
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100% = all profit taken as dividends
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Enter 0 for TX, FL, WA, NV, etc.
C-Corp Total Tax
$42,000
Corporate Tax (21%)
$23,800
Dividend Tax
$65,800
Total Tax Burden
32.9%
Effective Rate
S-Corp Total Tax
$12,240
FICA on Salary
$30,000
Income Tax (pass-through)
$42,240
Total Tax Burden
21.1%
Effective Rate
$23,560
S-Corp Saves vs C-Corp
$7,200
QBI Deduction Benefit
$108,800
Tax-Free Distributions
S-Corp
Recommended Structure
Detailed Tax Breakdown
| Tax Component | C-Corp | S-Corp |
|---|---|---|
| Corporate income tax (21%) | $42,000 | β |
| FICA on salary (employer + employee) | β | $12,240 |
| QBI deduction (20%) | β | -$24,000 |
| Federal income tax on pass-through | $23,800 | $30,000 |
| State income tax | $7,900 | $10,000 |
| Total Tax Burden | $73,700 | $42,240 |
C-Corp vs S-Corp: How the Tax Works
The fundamental difference is when and how profits are taxed. C-Corps pay corporate income tax first, then shareholders pay dividend tax on distributions. S-Corps pass income directly to owners who pay individual rates.
C-Corp Tax Formula
Corporate Tax = Net Income Γ 21%
After-Tax Profit = Net Income Γ 79%
Dividend Tax = After-Tax Profit Γ Distribution% Γ Dividend Rate (0/15/20%)
Total C-Corp Burden = Corporate Tax + Dividend Tax
After-Tax Profit = Net Income Γ 79%
Dividend Tax = After-Tax Profit Γ Distribution% Γ Dividend Rate (0/15/20%)
Total C-Corp Burden = Corporate Tax + Dividend Tax
S-Corp Tax Formula
FICA on Salary = Salary Γ 15.3% (both sides, capped at SS wage base)
QBI Deduction = min(QBI Γ 20%, taxable income Γ 20%)
Taxable Pass-Through = Net Income β Salary β QBI Deduction
Total S-Corp Burden = FICA + Federal Income Tax + State Tax
QBI Deduction = min(QBI Γ 20%, taxable income Γ 20%)
Taxable Pass-Through = Net Income β Salary β QBI Deduction
Total S-Corp Burden = FICA + Federal Income Tax + State Tax
Example: $200K profit, $80K salary, MFJ
C-Corp: $200K Γ 21% = $42K corporate tax. Remaining $158K Γ 15% dividend tax = $23.7K. Total: ~$65.7K
S-Corp: $80K salary Γ 15.3% FICA = $12.24K. Pass-through $120K minus QBI $24K = $96K at ~22% = $21.1K. Total: ~$33.3K
S-Corp saves ~$32K/year in this scenario.
S-Corp: $80K salary Γ 15.3% FICA = $12.24K. Pass-through $120K minus QBI $24K = $96K at ~22% = $21.1K. Total: ~$33.3K
S-Corp saves ~$32K/year in this scenario.
Extended
Breakeven Chart & QBI Impact
See C-Corp vs S-Corp tax at multiple income levels and how the QBI deduction changes the math
C-Corp vs S-Corp at Multiple Income Levels
The table below shows total tax burden for both structures as income scales, using a 40% salary ratio for S-Corp and 100% dividend distribution for C-Corp.
| Net Income | C-Corp Total | S-Corp Total | S-Corp Saves |
|---|
QBI Deduction Impact Analysis
The Section 199A QBI deduction (up to 20% of qualified business income) significantly changes the S-Corp calculus. Below shows S-Corp tax with and without QBI at your entered income level.
When C-Corp Makes Sense
- Retained earnings: If you reinvest 100% of profit and take no dividends, C-Corp avoids dividend tax entirely (paying only 21%)
- Qualified small business stock (QSBS): C-Corp stock may qualify for up to 100% capital gains exclusion under Section 1202
- Venture capital / investor funding: VCs strongly prefer C-Corp (Delaware) for convertible notes and preferred stock structures
- Corporate fringe benefits: C-Corp can deduct more benefits (health insurance, group-term life) as business expenses
- Multiple share classes: C-Corps can have preferred stock; S-Corps are limited to one class
Frequently Asked Questions
What is the C-Corp tax rate for 2026?
C-Corps pay a flat 21% federal corporate income tax on net profit under current law (Tax Cuts and Jobs Act rate). This is separate from and in addition to the dividend tax shareholders pay when profit is distributed.
What is double taxation with a C-Corp?
A C-Corp pays 21% corporate tax on profit. When it distributes dividends to shareholders, those dividends are taxed again at the qualified dividend rate (0%, 15%, or 20% depending on income). This is the "double taxation" that makes S-Corp pass-through attractive for many small businesses.
What is the QBI deduction and how does it affect S-Corp owners?
The Qualified Business Income (QBI) deduction (Section 199A) allows S-Corp owners who qualify to deduct up to 20% of qualified business income from taxable income. For 2026, this deduction is still in effect. The deduction phases out for specified service trades above $197,300 (single) and $394,600 (MFJ).
At what income level is C-Corp better than S-Corp?
C-Corp can be advantageous when: (1) profits are reinvested rather than distributed (avoiding dividend tax), (2) you plan to take the company public or need venture funding, or (3) you benefit from corporate fringe benefits. For most profitable pass-through businesses that distribute earnings, S-Corp is generally preferred.
Can an S-Corp convert to a C-Corp?
Yes. An S-Corp can revoke its S-election and convert to C-Corp status. However, there is a 5-year waiting period before re-electing S-Corp status after a voluntary revocation. Consult a tax professional before making this change.