Professional services
Business Tax Calculator
Estimates business tax, where profit and taxable income are not the same figure.
Result
Not tax advice. Entity choice, reasonable compensation, pass-through deductions and state treatment interact in ways that depend entirely on your circumstances, and the rules change annually. This estimates a set-aside; the decision belongs with an accountant. The pass-through deduction has income thresholds and excludes several service businesses above them, so claiming the full 20% is frequently wrong. This also applies a flat marginal rate rather than progressive brackets, which overstates the tax.
Get a Free Business AuditHow the calculation works
Tax on business income starts from taxable income rather than from book profit, and the two differ through depreciation timing, non-deductible items and other adjustments. The rate applied depends on the entity: pass-through income is taxed on the owners' returns alongside self-employment tax where applicable, while a corporation pays at the corporate rate with a second layer on distributions. This is a planning estimate.
What moves the number
- Entity type and therefore which rates apply.
- Adjustments separating book profit from taxable income.
- Capital purchases and the depreciation or expensing treatment chosen.
- State tax, which varies widely in both rate and base.
Where this one goes wrong
Capital purchases are where planning estimates most often go wrong, because the treatment chosen changes the year's tax substantially: expensing a purchase immediately where the rules allow it reduces this year and increases later ones, while depreciating it spreads the deduction. That is a timing decision with real cash consequences, and it is specific enough to the rules in force that it belongs with a preparer rather than a calculator. Rates and limits change annually.
Before you quote
- Start from taxable income rather than book profit.
- Decide capital purchase treatment deliberately, with advice.
- Add state tax, which may be on income, gross receipts or both.
Where the rules come from
Questions
About this calculator
Why is my taxable income different from my profit?
Because tax rules and accounting rules diverge: depreciation methods, timing differences and items that are not deductible all separate the two. Sometimes the gap is large, which is why starting a tax estimate from book profit can be meaningfully off.
Should I expense or depreciate equipment?
It is a timing decision with real cash consequences, and the limits and eligibility change. Expensing reduces this year's tax and raises later years; depreciating spreads it. Which is better depends on your expected profit path, so it is worth asking a preparer.
Does this include state tax?
No. State treatment varies too widely to model, with differences in rate, in what is taxed, and in whether there is a corporate income tax, a gross receipts tax or neither. Add your state's position to anything this produces.
The formula
net profit, then self-employment tax, then income tax on profit less half the SE tax, the standard deduction and any pass-through deduction
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How to use this calculator
- Business revenue ($). Enter your own figure; the page starts at $310,000.
- Deductible business expenses ($). Enter your own figure; the page starts at $138,000.
- Self-employment tax rate (%). Enter your own figure; the page starts at 15.3%.
- Federal marginal rate (%). Enter your own figure; the page starts at 22%.
- State rate (%). Enter your own figure; the page starts at 5%.
- Standard or itemised deduction ($). Enter your own figure; the page starts at $14,600.
The result updates as you type, so you can try a figure, see what it does to estimated total tax, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Business revenue | $310,000 |
| Deductible business expenses | $138,000 |
| Self-employment tax rate | 15.3% |
| Federal marginal rate | 22% |
| State rate | 5% |
| Standard or itemised deduction | $14,600 |
| Pass-through deduction claimed | 20% |
What comes out
| Result | Value |
|---|---|
| Estimated total tax main result | $54,232 |
| Net business profit | $172,000 |
| Self-employment tax | $24,303 |
| Income tax | $29,929 |
| Left after tax | $117,768 |
| Effective rate on profit | 31.53% |
On $172,000 of net profit the tax is about $54,232, made up of $24,303 self-employment tax and $29,929 income tax. That leaves $117,768, an effective rate of 31.53%.
How sensitive the answer is
Holding everything else steady and changing only business revenue, this is what happens to estimated total tax. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Business revenue ($) | Estimated total tax |
|---|---|
| $155,000 | $2,402 |
| $232,500 | $28,020 |
| $310,000 example above | $54,232 |
| $465,000 | $106,656 |
| $620,000 | $159,080 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Business revenue ($)
- A money amount, starting at $310,000.
- Deductible business expenses ($)
- A money amount, starting at $138,000.
- Self-employment tax rate (%)
- A percentage, between 0 and 20, starting at 15.3%.
- Federal marginal rate (%)
- A percentage, between 0 and 50, starting at 22%.
- State rate (%)
- A percentage, between 0 and 15, starting at 5%.
- Standard or itemised deduction ($)
- A money amount, starting at $14,600.
- Pass-through deduction claimed (%)
- Where it applies. Eligibility is restricted.
What the results tell you
| Result | What it is |
|---|---|
| Estimated total tax | The headline result. A money figure. |
| Net business profit | A money figure. |
| Self-employment tax | A money figure. |
| Income tax | A money figure. |
| Left after tax | A money figure. |
| Effective rate on profit | A percentage. |
Keep going
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