LLC vs S corp for general contractors (2026)
At $130,000 of profit, an S corp election saves a general contractor money over a sole proprietorship in 1 of 51 states, with a $91,000 salary. Pick your state for the calculator with these numbers filled in.
- This work is not a specified service trade or business, so the 20% QBI deduction stays available above the income limit, subject to the wage limit. Construction is not a listed field in Treas. Reg. 1.199A-5(b)(2). law.cornell.edu
- Pay figure is for construction managers, the closest SOC. Subcontractor and material costs make revenue several times profit, and liability from job sites is a main reason to form an LLC.
- Median pay for employees in this job: $114,990 (BLS, May 2025).
| State | Sole proprietor | S corp | Saving |
|---|---|---|---|
| District of Columbia | $43,182 | $42,194 | $988 |
| New Hampshire | $34,378 | $34,400 | +$22 |
| South Carolina | $36,057 | $36,149 | +$92 |
| Nebraska | $36,304 | $36,939 | +$635 |
| Virginia | $37,643 | $38,313 | +$670 |
| Alabama | $37,286 | $37,968 | +$682 |
| Louisiana | $34,749 | $35,445 | +$696 |
| Missouri | $36,251 | $36,947 | +$696 |
| Mississippi | $35,611 | $36,325 | +$714 |
| Kansas | $37,452 | $38,177 | +$725 |
| Maryland | $36,918 | $37,644 | +$726 |
| West Virginia | $36,154 | $36,910 | +$756 |
| Georgia | $36,790 | $37,551 | +$761 |
| Michigan | $36,394 | $37,156 | +$762 |
| Arizona | $34,137 | $34,901 | +$764 |
| New Mexico | $36,099 | $36,876 | +$777 |
| Iowa | $35,489 | $36,278 | +$789 |
| Arkansas | $35,809 | $36,617 | +$808 |
| Indiana | $35,045 | $35,862 | +$817 |
| Oklahoma | $36,401 | $37,254 | +$853 |
| Kentucky | $35,621 | $36,477 | +$856 |
| Montana | $36,975 | $37,927 | +$952 |
| Texas | $31,510 | $32,470 | +$960 |
| Idaho | $36,805 | $37,782 | +$977 |
| Utah | $36,886 | $37,880 | +$994 |
| South Dakota | $31,510 | $32,532 | +$1,022 |
| Florida | $31,510 | $32,540 | +$1,030 |
| Wisconsin | $36,533 | $37,661 | +$1,128 |
| Pennsylvania | $35,219 | $36,363 | +$1,144 |
| North Carolina | $35,822 | $36,971 | +$1,149 |
| North Dakota | $32,585 | $33,768 | +$1,183 |
| Delaware | $38,301 | $39,542 | +$1,241 |
| Illinois | $37,346 | $38,643 | +$1,297 |
| Maine | $38,127 | $39,500 | +$1,373 |
| Wyoming | $31,510 | $32,954 | +$1,444 |
| Vermont | $37,024 | $38,476 | +$1,452 |
| Alaska | $31,545 | $33,070 | +$1,525 |
| Minnesota | $38,202 | $39,751 | +$1,549 |
| Connecticut | $36,609 | $38,194 | +$1,585 |
| New York | $37,598 | $39,238 | +$1,640 |
| Ohio | $31,510 | $33,221 | +$1,711 |
| Nevada | $31,649 | $33,638 | +$1,989 |
| Colorado | $36,117 | $38,131 | +$2,014 |
| Massachusetts | $37,331 | $39,445 | +$2,114 |
| California | $38,654 | $40,926 | +$2,272 |
| Rhode Island | $35,647 | $37,930 | +$2,283 |
| Oregon | $41,508 | $43,945 | +$2,437 |
| Tennessee | $31,510 | $34,362 | +$2,852 |
| New Jersey | $37,016 | $40,134 | +$3,118 |
| Washington | $39,914 | $44,557 | +$4,643 |
| Hawaii | $59,023 | $65,197 | +$6,174 |
Yearly federal and state tax and fees at $130,000 profit and $806,000 revenue, single filer, $1,800 a year of payroll and return costs.
Questions
Should a general contractor form an S corp?
At $130,000 of profit and a $91,000 salary, an LLC taxed as an S corp costs less than a sole proprietorship in 1 of 51 states. The biggest saving is in District of Columbia ($988 a year), and in Hawaii it costs $6,174 more.
What salary should a general contractor pay themselves?
The IRS expects pay in line with what the work would earn an employee. The median for employees in this job is $114,990 (BLS, May 2025). The figures here use that, capped at 70% of profit. More on reasonable salary.
Other professions
- Management consultant
- Software developer
- Graphic designer
- Photographer
- Real estate agent
- Insurance agent
- Financial advisor
- Therapist
- Physical therapist
- Nurse practitioner
- Physician
- Dentist
- Lawyer
- Accountant
- Freelance writer
- Web developer
- Marketing consultant
- Electrician
- Plumber
- Truck driver
- Hair stylist
- Personal trainer
- Rideshare driver