How the numbers are worked out
Each structure's yearly cost is the tax and fees it pays on the same business profit, worked out the way the IRS and the state work it out, with 2026 figures.
The five structures
- Sole proprietorship and single-member LLC: self-employment tax of 15.3% on 92.35% of profit (12.4% only up to the Social Security wage base), half of it deducted from income, then federal income tax after the standard deduction and the 20% qualified business income deduction, then state income tax. The LLC adds the state's LLC fees and taxes.
- LLC taxed as an S corp and S corporation: the owner takes a salary (by default 40% of profit, at least $30,000 where profit allows), with Social Security and Medicare on both the employer and employee side, federal unemployment tax and the state's new-employer unemployment rate. The rest of the profit passes to the owner's return. $1,800 a year is added for a payroll service and the Form 1120-S return.
- C corporation: the same salary, then 21% federal tax and state corporate tax on the company's profit, then all remaining profit paid out as qualified dividends and taxed on the owner's return, including the 3.8% net investment income tax above its threshold. $2,000 a year is added for payroll and the Form 1120 return.
Federal figures for 2026
| Standard deduction | $16,100 single, $32,200 married filing jointly | irs.gov, 2026 rates |
|---|---|---|
| Income tax brackets | 10% to 37%; the 37% bracket starts at $640,600 single | irs.gov, 2026 rates |
| Social Security wage base | $184,500 | ssa.gov, 2026 rates |
| Additional Medicare tax | 0.9% above $200,000 single, $250,000 joint | irs.gov, 2026 rates |
| Qualified business income deduction | 20%, limits phase in above $201,750 single, $403,500 joint | irs.gov, 2026 rates |
| Qualified dividends | 0% up to $49,450, 15% up to $545,500, 20% above (single) | irs.gov, 2026 rates |
| Federal unemployment tax | 0.6% of the first $7,000 of wages | irs.gov, 2026 rates |
| Corporate income tax | 21% | irs.gov, 2026 rates |
What is left out
- City and county taxes, such as New York City's unincorporated business tax or local income taxes in Ohio, Pennsylvania and Maryland. State pages name the ones that apply.
- Tax credits, retirement plan contributions, health insurance deductions and itemised deductions.
- Businesses with more than one owner, and owners with other business income or losses.
- Pass-through entity tax elections, which can lower federal tax for owners in high-tax states.
State fees and rates come from each state's Secretary of State, revenue department and unemployment agency. Where a figure could not be confirmed on an official page, the state page says so. All state figures were last checked on October 24, 2026.
Spotted a wrong figure? Write to hello@structurecost.com with the official page that shows it.