Professional services
LLC Tax Calculator
Estimates LLC tax, where the first thing to understand is that an LLC has no tax status of its own.
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
An LLC is a state law entity, not a federal tax classification, so the tax depends on how it is treated. By default a single-member LLC is disregarded and its income is reported by the owner, and a multi-member LLC is treated as a partnership with income passing through to members. Either way the owner pays income tax and self-employment tax on their share. An LLC can also elect corporate or S corporation treatment, which changes the arithmetic entirely.
What moves the number
- Default treatment as disregarded entity or partnership.
- Whether a corporate or S corporation election has been made.
- Net earnings after expenses, and each member's share.
- State treatment, which varies and includes franchise taxes in some states.
Where this one goes wrong
The common misunderstanding is that forming an LLC changes the tax bill. By default it does not: the liability protection is a state law benefit and the income is taxed to the owners much as it was before. What can change the tax is an S corporation election, which has its own requirements and administrative cost. State treatment is the other variable, since several states impose franchise taxes or fees on LLCs regardless of profit. This is a planning estimate, not advice.
Before you quote
- Confirm how the LLC is actually classified for federal tax.
- Check your state's LLC fees and franchise tax separately.
- Weigh an S corporation election with a professional rather than by rule of thumb.
Where the rules come from
Questions
About this calculator
Does forming an LLC lower my taxes?
By itself, generally no. An LLC is a state law entity rather than a tax classification, and by default the income is taxed to the owners much as before. The liability protection is the benefit; a tax change requires an election, which has its own conditions and costs.
What is a disregarded entity?
A single-member LLC that the IRS does not treat as separate from its owner for income tax, so the activity is reported on the owner's return. It is still a separate entity under state law, which is why the liability protection and the tax treatment are different questions.
Should my LLC elect S corporation status?
It can reduce self-employment tax on the portion taken as distributions rather than wages, but it requires reasonable compensation as payroll, adds administrative cost and has eligibility rules. Whether it nets out ahead depends on your numbers and is worth asking a professional.
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 $165,000.
- Deductible business expenses ($). Enter your own figure; the page starts at $42,000.
- Self-employment tax rate (%). Enter your own figure; the page starts at 15.3%.
- Federal marginal rate (%). Enter your own figure; the page starts at 22%.
- State rate (%). Enter your own figure; the page starts at 5%.
- Standard or itemised deduction ($). 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 | $165,000 |
| Deductible business expenses | $42,000 |
| 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 | $37,659 |
| Net business profit | $123,000 |
| Self-employment tax | $17,379 |
| Income tax | $20,280 |
| Left after tax | $85,341 |
| Effective rate on profit | 30.62% |
On $123,000 of net profit the tax is about $37,659, made up of $17,379 self-employment tax and $20,280 income tax. That leaves $85,341, an effective rate of 30.62%.
How sensitive the answer is
Holding everything else steady and changing only business revenue, this is what happens to estimated total tax. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Business revenue ($) | Estimated total tax |
|---|---|
| $82,500 | $9,756 |
| $123,750 | $23,708 |
| $165,000 example above | $37,659 |
| $247,500 | $65,562 |
| $330,000 | $93,466 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Business revenue ($)
- A money amount, starting at $165,000.
- Deductible business expenses ($)
- A money amount, starting at $42,000.
- Self-employment tax rate (%)
- A percentage, between 0 and 20, starting at 15.3%.
- Federal marginal rate (%)
- A percentage, between 0 and 50, starting at 22%.
- State rate (%)
- A percentage, between 0 and 15, starting at 5%.
- Standard or itemised deduction ($)
- 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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