Chicago S Corp Income Tax Calculator

Are you an Illinois S corp owner, or considering the S corp election, and want to understand your potential tax savings? Our team at Lewis CPA understands that navigating the complexities of S corp income tax, including reasonable salary and distributions, can be challenging.

Our new S Corp income tax calculator provides a quick estimate of your federal and Illinois tax liabilities and will help with your initial income tax planning.

How Our S Corp Income Tax Calculator Works

Our S corp tax calculator helps you estimate your total tax burden by comparing S corporation taxation to a sole proprietorship structure. This comparison reveals the potential tax savings available through S corporation elections, particularly the substantial reduction in self-employment taxes. Here are the key inputs you'll need to enter:

• Your Business's Estimated Net Income: This represents your business income or projected profit before paying yourself a W-2 salary as a shareholder-employee. This is the total amount available for both your reasonable salary and distributions.
• Your Proposed Reasonable Salary (W-2): This is the portion of income you'll pay yourself as a salary, which is subject to payroll taxes, including Social Security and Medicare. The IRS requires S corp owners who work in the business to pay themselves a reasonable salary before taking distributions.
• Your Estimated Federal Income Tax Rate: Enter your marginal federal tax rate as a percentage. This affects how much federal income tax you'll pay on both your salary and pass-through taxation from distributions.
• Illinois Tax Rates (Pre-filled): Our calculator automatically includes Illinois's 4.95 percent individual income tax rate and the 1.5 percent Personal Property Replacement Tax (PPRT) that applies to Illinois S corps.

Our calculator provides:

• Federal Income Tax on salary and distributions
• Estimated Self-Employment Tax Savings compared to operating as a sole proprietor or LLC without S corp election
• Illinois Individual Income Tax calculations
• Illinois PPRT assessment
• Your Total Estimated S Corp Tax Liability
• A Clear Comparison showing potential annual savings

The calculator demonstrates how an S corp structure allows you to significantly reduce your self-employment tax burden compared to a sole proprietorship, where the entire business income is subject to self-employment taxes.

An Example of Calculating S Corp Income Taxes

Let's walk through a practical example to illustrate how our S Corp tax calculator works and the potential savings you could achieve.

Example Business Scenario

• Business Net Income (before salary): $100,000
• Proposed Reasonable Salary: $60,000
• Federal Marginal Tax Rate: 24%
• Business Distributions: $40,000 ($100,000 - $60,000)

Sole Proprietorship/LLC Tax Calculation

• Federal Self-Employment Tax: $100,000 × 15.3% = $15,300
• Federal Income Tax: $100,000 × 24% = $24,000
• Illinois Income Tax: $100,000 × 4.95% = $4,950
• Total Tax Liability (Sole Prop/LLC): $44,250

S Corporation Tax Calculation

• Federal Payroll Tax (FICA): $60,000 × 15.3% = $9,180 (Only applied to salary, not distributions)
• Federal Income Tax: $100,000 × 24% = $24,000 (Applied to total income: salary + distributions)
• Illinois Income Tax: $100,000 × 4.95% = $4,950
• Illinois PPRT: $100,000 × 1.5% = $1,500
• Total Tax Liability (S Corp): $39,630

In this example, an S Corporation election saves you $4,620 annually by reducing self-employment taxes on the $40,000 in distributions. The key advantage is that distributions are subject only to income tax, not self-employment tax, while still allowing you to pay yourself a reasonable salary that the IRS requires.

Why Choose Lewis.cpa for Your S Corp Tax Needs?

At Lewis.cpa, we don't just process numbers; we become an integral part of your financial strategy:

• Specialized S Corp Expertise: Our experienced team specializes in comprehensive small business tax services throughout Illinois, with a focus on S corp tax planning and management.
• Strategic Tax Optimization: We go beyond basic compliance, helping you understand the full tax implications of various business structures (from LLC formation to S corp election) to ensure you choose the most tax-efficient option for your unique situation.
• Proactive & Ongoing Support: We provide continuous, proactive guidance for payroll taxes, meticulous tax preparation, and strategic tax planning.‍
• Maximized Profitability: Our goal is to minimize your tax burden while maximizing your business's profits and enhancing your cash flow.

Whether you're just launching your entrepreneurial journey or contemplating a shift in your business entity structure, our team at Lewis.cpa is committed to guiding you through every step. Partner with us to transform your S corp tax obligations into opportunities for significant financial growth.

Estimate Your Tax Savings Today with Lewis.cpa

While our S-Corp income tax calculator provides valuable insights into potential tax savings, true tax optimization requires expert guidance from experienced professionals who understand the nuances of Illinois tax law and S corporation requirements. This is exactly what you can expect from us at Lewis.cpa. We’ve helped thousands of clients optimize their taxes and reach their financial goals. 

Contact us to ensure you're maximizing your S-Corp tax advantages, maintaining compliance with both federal and Illinois requirements, and making informed financial planning decisions for your business.