2026 S-Corp Reasonable Salary, 1099 vs. W-2 & 23% QBI Calculator

Find the exact 2026 mathematical sweet spot between Form 1120-S W-2 Officer Compensation and Schedule K-1 Distributions, factoring in the 2026 Social Security wage cap ($184,500), the permanent 23% Section 199A QBI deduction, and IRC § 62(c) Accountable Plan tax-free reimbursements.

Part I · Business Entity, Net Profit & Officer Reasonable Salary

Corporation / LLC Legal Name * Printed on Corporate Minutes Resolution PDF Enter a company or taxpayer name.

Primary Owner Industry / Role Sets BLS/IRS occupational salary benchmark

2026 Personal Filing Status Sets 2026 QBI phase-out & federal tax brackets

Annual Net Profit Before Owner Pay ($) * Gross revenue minus operating expenses ($20k to $5M) Enter net profit between $20,000 and $5,000,000.

Officer W-2 Reasonable Salary ($) * Form 1120-S Line 7 Officer Compensation Enter a W-2 salary between $10,000 and $2,000,000.

IRC § 62(c) Accountable Plan Reimbursements ($) Tax-free Home Office + Business Mileage deduction Enter $0 to $100,000 in accountable plan reimbursements.

Part II · Solo 401(k) / SEP, 2% Shareholder Health Insurance & State PTET

2% Shareholder Health Insurance ($/yr) Added to W-2 Box 1 (FICA-exempt!) & Form 1040 Sch 1

S-Corp Employer 401(k) Profit Sharing ($) Up to 25% of W-2 salary ($72,000 total 2026 415(c) cap)

Section 199A QBI Deduction Rate Enacted Public Law 119-21 permanent 20% rate ($400 min floor)

Build IRC § 62(c) Accountable Plan PDF

2026 LLC (1099) vs. S-Corp Tax Comparison

Form 1120-S + Schedule K-1 + IRC § 199A QBI

Audit Risk: LOW (41% Ratio)

A · Sole Prop / Single-Member LLC (Schedule C / 1099)

Net Schedule C Business Profit$176,600.00

Self-Employment Tax (15.3% SS + Medicare)$24,578.02

Schedule C Section 199A QBI Deduction-$32,822.43

Estimated Federal Income + SE Tax (LLC)$46,791.10

B · 2026 S-Corporation (Form 1120-S + W-2 + K-1)

Officer W-2 Reasonable Salary (Line 7)$76,000.00

S-Corp K-1 Distribution (0% SE / FICA Tax!)$85,600.00

Employer + Employee FICA Tax on W-2 Salary$11,628.00

S-Corp Section 199A QBI Deduction (23%)-$19,688.00

Estimated Federal Income + FICA Tax (S-Corp)$36,214.18

Net Annual 2026 S-Corp Tax Savings vs. 1099 LLC

$10,576.92 / yr $12,950.02 FICA Saved