LLC taxed as S corp vs S corporation in Alabama: which costs less (2026)

At $100,000 profit in Alabama, an LLC taxed as an S corp costs $21,803 a year in tax and fees and an S corporation costs $21,803. On these figures an S corporation does not cost less at any profit up to $500,000.

+$0 a year

more for an S corporation than an LLC taxed as an S corp in Alabama, at these numbers.

With these settings the switch does not pay at any profit from $10,000 to $500,000. As an S corporation this uses the state's pass-through entity tax election, which lowers the cost here.

Alabama, 2026: $100,000 profit, single filer

Item	LLC as S corp	S corp	Change
Payroll tax on your salaryirs.gov, 2026 rates	$6,378	$6,378	$0
Payroll service and tax return (estimate)	$1,800	$1,800	$0
Alabama pass-through entity tax, paid by the company (elected)revenue.alabama.gov, checked Oct 20, 2026	$2,744	$2,744	$0
Federal income taxirs.gov, 2026 rates	$9,146	$9,146	$0
State income tax, after the PTET creditrevenue.alabama.gov, checked Oct 20, 2026	$1,735	$1,735	$0
Yearly cost	$21,803	$21,803	+$0

What these figures count

State income tax, and state taxes on the business itself: franchise, LLC, S corp, gross receipts and excise taxes.
Social Security and Medicare on both sides of an owner salary, federal unemployment tax and the state's new-employer rate.
The 20% qualified business income deduction with its income limits and the professional-service rule.
Yearly report fees, and a cost you can change for payroll and the business tax return.

Many S corp calculators leave out state taxes and the QBI deduction, which can make the election look better than it is.

Yearly cost at each profit level

Profit	LLC as S corp	S corp	Difference
$30,000	$7,720	$7,720	+$0
$50,000	$11,512	$11,512	+$0
$75,000	$15,042	$15,042	+$0
$100,000	$21,803	$21,803	+$0
$150,000	$36,478	$36,478	+$0
$200,000	$52,041	$52,041	+$0
$300,000	$85,458	$85,458	+$0

Federal and Alabama tax and fees, single filer, revenue 1.5 times profit, default salary for S and C corps. "Difference" is S corporation minus LLC taxed as an S corp.

What the switch takes in Alabama

File the Certificate of Formation (Domestic Corporation) with the state: $200 (fee).
Federal return each year: Form 1120-S, due March 15, plus your own Form 1040.
State upkeep each year: no yearly report fee, due none.

What changes between the two

Both are taxed the same way by the IRS once the election is made: salary with payroll tax, the rest as a distribution, one Form 1120-S. The difference is state law: an LLC files Certificate of Formation (Domestic LLC) and no yearly report fee, a corporation files Certificate of Formation (Domestic Corporation) and no yearly report fee.

A corporation also has formalities an LLC skips: a board, bylaws, share records and yearly minutes. Most one-person businesses pick the LLC route for that reason.

Questions

How much does it save at $100,000 in Alabama?

Nothing. S corporation costs $0 a year more ($21,803 against $21,803).

Is an LLC taxed as an S corp the same as an S corp?

For federal tax, yes. For Alabama fees and paperwork, no: the LLC pays no yearly report fee and the corporation no yearly report fee.

More for Alabama

Common cases in Alabama

Other states