MN · Tax year 2026 · Last reviewed 2026-08-24
LLC vs S Corp in Minnesota: Tax Savings Calculator.
Compare federal payroll taxes, self-employment taxes, Minnesota ’s annual report and estimated S Corp savings in seconds.
At $100,000 net profit with a $50,000 W-2 salary, the federal payroll tax delta is $10,305. Adjusted for Minnesota's recurring cost, the estimated net modeled benefit (yr 1) is$9,105.
LLC Filing Fee
$155
one-time, Minnesota Secretary of State
Annual Franchise / Report (LLC)
$0
no annual report fee modeled
S-Corp Recurring Cost
$0
same as the LLC rate
Estimated Net Modeled Benefit (yr 1)
$9,105
federal delta minus the annual fee
01 · Minnesota model
Tune the inputs. Numbers update live.
What does this mean? Your expected business profit for the year after business expenses but before the owner's salary.
The IRS requires "reasonable compensation" for S-Corp shareholder-employees. The salary is capped at your current net profit.
This is an illustrative assumption, not a tax or an IRS-required amount. Real overhead depends on your payroll provider, your CPA, and your state.
Per IRS Form 8959, these are added to your business income to determine whether the 0.9% Additional Medicare Tax applies.
Sets the Form 8959 threshold: $200K (single / HOH), $250K (MFJ), $125K (MFS).
Minnesota LLC recurring fee (deducted from savings)
$0
No recurring state fee modeled for this state.
Defaults: $100K profit · $50K salary
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LLC
Federal payroll tax
$14,130
S-CORP
Federal payroll tax
$3,825
Federal Payroll / SE Tax Difference
$10,305
LLC SE tax minus the S-Corp's employer-side FICA on the owner salary. This is the federal payroll-tax piece only.
Estimated Net Modeled Benefit (yr 1)
$9,105
- Federal payroll-tax delta
- $10,305
- − Minnesota annual fee
- $10,305
- − Modeled S-Corp admin overhead
- $1,200
- = Estimated net modeled benefit
- $9,105
- − Approx. §199A W-2 drag
- $0
- = Net after QBI drag
- $9,105
Federal delta = the LLC's self-employment tax minus the S-Corp's employer-side payroll tax. The S-Corp employer-side figure ishalf of the standard 12.4% + 2.9% FICA on the salary; the 0.9% Additional Medicare Tax is entirely employee-side (no employer match) and is not included in the S-Corp employer-side comparison. The $155 filing fee is not included — it's a one-time setup cost. Income tax, QBI, health insurance, and retirement contributions are not modeled.
Estimate. Methodology & scope
ESTIMATE. The figures above estimate the federal payroll / self-employment tax difference between a Single-Member LLC (Schedule C / Schedule SE) and an S-Corp election, plus Minnesota's modeled $0 annual report (no recurring franchise tax is currently modeled) and the one-time $155 Minnesota LLC filing fee (setup cost, not deducted from the year-1 net benefit). They do not include federal or Minnesota individual income tax (the state-income-tax flag is informational; the dollar amount is not modeled), the §199A QBI deduction (made permanent under the One Big Beautiful Bill Act, H.R. 1 / Public Law 119-21, signed July 4, 2025, with a 2026 phase-in range of $200K–$275K single / $400K–$550K MFJ), self-employed health insurance, retirement contributions, the half-of-SE-tax Schedule 1 adjustment, filing-status-specific deductions or credits, multi-state apportionment, reasonable-compensation enforcement, or other items that depend on your complete tax situation. The S-Corp administration overhead is a configurable illustrative assumption (defaulted to $1,200/yr), not a tax and not an IRS-required amount. Verify with a licensed CPA, EA, or tax attorney before acting.
02 · Why Minnesota specifically
The state-level numbers that move the answer.
An S-Corp election only pencils out when the federal payroll tax saved outpaces the recurring cost of running a corporate entity. Minnesotacharges $0per year to keep your entity in good standing and assesses ordinary state income tax on top of the federal figure.
At the calculator's default $100K / $50K inputs, the federal delta ($10,305) is what an LLC owner gives up in self-employment tax on net profit. After the Minnesota annual fee, the estimated net modeled benefit is$9,105.
State-specific note: Minnesota does not charge an annual report fee for LLCs.
Localized formula — how this number was calculated
// Minnesota — same engine as the homepage
seBase = netProfit × 0.9235
ssPortion = min(seBase, 184_500) × 0.124
medicare = seBase × 0.029
addlMed = max(0, seBase + existingWages − 200_000) × 0.009
llcTax = ssPortion + medicare + addlMed
// S-Corp — employer-side payroll tax only
ssPortion = min(salary, 184_500) × 0.124
medicare = salary × 0.029
standard = ssPortion + medicare
addlMed = max(0, salary + existingWages − 200_000) × 0.009
// employee-side only — no employer match
scorpTax = standard / 2 // 50% of standard FICA — AddlMed excluded
// Net benefit
payrollDelta = llcTax − scorpTax
netOfFee = max(0, payrollDelta − 0)
savings = max(0, netOfFee − 1200) // $1,200 admin overhead- LLC filing: one-time $155 to form the entity in Minnesota.
- Annual franchise / report: $0/yr modeled — confirm with Minnesota Secretary of State whether a filing is required.
- State income tax: applies on top of federal ordinary rates; not modeled.
03 · FAQ
LLC vs S Corp in Minnesota — frequently asked questions
Common questions about choosing between an LLC and S Corp in Minnesota, sourced from Google, Reddit, and Quora. The right answer depends on your income, reasonable compensation, and other factors — talk to a CPA for personal advice.
How much does it cost to form an LLC in Minnesota?
Minnesota charges a $155 filing fee to form an LLC. Notably, Minnesota does not charge an annual report fee for LLCs.
Does Minnesota have a state income tax?
Yes. Minnesota imposes a state individual income tax with rates ranging from 5.35% to 9.85%. Minnesota also imposes a state tax on S-Corps, which can add to the overall tax burden.
Is an S Corp election worth it in Minnesota?
With no annual report fee, the fee side is cost-effective. However, Minnesota's high income tax rates (up to 9.85%) and the state-level S-Corp tax can offset some federal savings. At $100K net profit, the federal savings of $5,500–$6,000 minus $0 annual fee still leaves a net benefit once profit exceeds $60K–$80K.
Does Minnesota tax S-Corps at the state level?
Yes. Minnesota imposes a state tax on S-Corps, which can add to the overall tax burden beyond just the individual income tax on shareholder income.
Do Minnesota LLCs need to file an annual report?
No. Minnesota does not charge an annual report fee for LLCs, making it one of the lower-maintenance states for ongoing compliance.
04 · Compare against
Run the model against another state.
05 · Methodology