Is an S corp worth it at $40,000 of profit? (2026)
At $40,000 of profit an S corp election costs less than a plain LLC in 1 of 51 jurisdictions. The middle state saves nothing a year, after payroll and the extra tax return.
| State | Plain LLC | LLC taxed as S corp | Saving |
|---|---|---|---|
| Tennessee | $9,735 | $9,281 | $454 |
| District of Columbia | $9,953 | $10,312 | +$359 |
| Illinois | $9,610 | $10,561 | +$951 |
| Louisiana | $8,183 | $9,181 | +$998 |
| Nebraska | $8,425 | $9,427 | +$1,002 |
| Virginia | $8,787 | $9,844 | +$1,057 |
| Arkansas | $8,742 | $9,802 | +$1,060 |
| Alabama | $9,021 | $10,100 | +$1,079 |
| Arizona | $7,963 | $9,045 | +$1,082 |
| Missouri | $8,237 | $9,322 | +$1,085 |
| Mississippi | $8,182 | $9,282 | +$1,100 |
| Iowa | $8,239 | $9,342 | +$1,103 |
| Maryland | $9,044 | $10,153 | +$1,109 |
| South Carolina | $7,868 | $8,983 | +$1,115 |
| Kansas | $8,733 | $9,849 | +$1,116 |
| Michigan | $8,774 | $9,896 | +$1,122 |
| Georgia | $8,577 | $9,701 | +$1,124 |
| Delaware | $9,265 | $10,403 | +$1,138 |
| Indiana | $8,507 | $9,651 | +$1,144 |
| West Virginia | $8,399 | $9,549 | +$1,150 |
| Idaho | $8,289 | $9,460 | +$1,171 |
| Florida | $7,534 | $8,711 | +$1,177 |
| Utah | $9,095 | $10,286 | +$1,191 |
| New Mexico | $8,058 | $9,259 | +$1,201 |
| Kentucky | $8,622 | $9,828 | +$1,206 |
| Texas | $7,427 | $8,635 | +$1,208 |
| Montana | $8,417 | $9,643 | +$1,226 |
| Oklahoma | $8,572 | $9,804 | +$1,232 |
| South Dakota | $7,469 | $8,702 | +$1,233 |
| North Dakota | $7,466 | $8,731 | +$1,265 |
| Wisconsin | $8,300 | $9,600 | +$1,300 |
| Pennsylvania | $8,573 | $9,876 | +$1,303 |
| Maine | $8,427 | $9,756 | +$1,329 |
| Ohio | $7,427 | $8,799 | +$1,372 |
| North Carolina | $8,548 | $9,922 | +$1,374 |
| Vermont | $8,271 | $9,692 | +$1,421 |
| Alaska | $7,504 | $8,926 | +$1,422 |
| Connecticut | $8,233 | $9,763 | +$1,530 |
| Minnesota | $8,597 | $10,142 | +$1,545 |
| New Hampshire | $7,504 | $9,102 | +$1,598 |
| California | $8,643 | $10,244 | +$1,601 |
| Wyoming | $7,473 | $9,087 | +$1,614 |
| Rhode Island | $8,534 | $10,178 | +$1,644 |
| New York | $8,859 | $10,521 | +$1,662 |
| Massachusetts | $9,427 | $11,259 | +$1,832 |
| Washington | $7,481 | $9,317 | +$1,836 |
| Nevada | $7,696 | $9,545 | +$1,849 |
| Oregon | $10,175 | $12,038 | +$1,863 |
| Hawaii | $10,267 | $12,210 | +$1,943 |
| Colorado | $8,372 | $10,319 | +$1,947 |
| New Jersey | $8,065 | $10,462 | +$2,397 |
Yearly federal and state tax and fees, single filer, salary $30,000, revenue $60,000, $1,800 a year for payroll and the Form 1120-S. Click a state for the calculator with this profit filled in.
Where the saving comes from
As a plain LLC, all $40,000 carries self-employment tax. As an S corp only the $30,000 salary carries Social Security and Medicare tax, which saves about $1,062 before costs. Payroll, the return and state unemployment tax take part of it back, and states with S corp or franchise taxes take more.
Questions
Is an S corp worth it at $40,000?
At $40,000 of profit an S corp election costs less than a plain LLC in 1 of 51 jurisdictions. The middle state saves nothing a year. The largest saving is in Tennessee ($454).
What salary does this assume?
$30,000, which is 40% of profit with a $30,000 floor where profit allows. The IRS expects a reasonable salary for the work. Pay yourself more and the saving shrinks.