TN · Tax year 2026 · Last reviewed 2026-08-24
LLC vs S Corp in Tennessee: Tax Savings Calculator.
Compare federal payroll taxes, self-employment taxes, Tennessee ’s $300 annual fee 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 Tennessee's recurring cost, the estimated net modeled benefit (yr 1) is$8,805.
LLC Filing Fee
$300
one-time, Tennessee Secretary of State
Annual Franchise / Report (LLC)
$300
recurring, every year
S-Corp Recurring Cost
$300
same as the LLC rate
Estimated Net Modeled Benefit (yr 1)
$8,805
federal delta minus the annual fee
01 · Tennessee 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).
Tennessee LLC recurring fee (deducted from savings)
$300
Recurring state filing/maintenance fee.
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)
$8,805
- Federal payroll-tax delta
- $10,305
- − Tennessee annual fee
- $10,005
- − Modeled S-Corp admin overhead
- $1,200
- = Estimated net modeled benefit
- $8,805
- − Approx. §199A W-2 drag
- $0
- = Net after QBI drag
- $8,805
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 $300 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 Tennessee's $300 LLC annual franchise / report fee and the $300 modeled S-Corp recurring cost and the one-time $300 Tennessee LLC filing fee (setup cost, not deducted from the year-1 net benefit). They do not include federal individual income tax (Tennessee has no individual state income tax, so there is no state income-tax layer to model), 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 Tennessee 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. Tennesseecharges $300per year to keep your entity in good standing and does not layer an individual income tax on top of your pass-through income.
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 Tennessee annual fee, the estimated net modeled benefit is$8,805.
State-specific note: Tennessee repealed its Hall income tax on stock/dividends in 2021. The $300 minimum franchise tax is required for LLCs with taxable net worth over $1M; smaller LLCs (net worth ≤ $1M) pay a reduced minimum of $100. The calculator uses $300 as a conservative default for LLCs subject to the minimum tax.
Localized formula — how this number was calculated
// Tennessee — 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 − 300)
savings = max(0, netOfFee − 1200) // $1,200 admin overhead- LLC filing: one-time $300 to form the entity in Tennessee.
- Annual franchise / report: $300/yr to maintain good standing.
- State income tax: not assessed on individual income.
03 · FAQ
LLC vs S Corp in Tennessee — frequently asked questions
Common questions about choosing between an LLC and S Corp in Tennessee, 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 Tennessee?
Tennessee charges a $300 filing fee to form an LLC. The minimum franchise tax is $300/year for LLCs with net worth over $1M (or $100 for smaller LLCs).
Does Tennessee have a state income tax?
No. Tennessee repealed its Hall income tax on stock/dividends in 2021. Tennessee does not impose a personal income tax on ordinary income, making the federal S-Corp savings especially clean.
Is an S Corp election worth it in Tennessee?
Tennessee's $300 minimum franchise tax applies to both LLCs and S-Corps. At $100K net profit, the federal savings of $5,500–$6,000 minus $300/year still leaves a strong net benefit. The election typically becomes worthwhile once net profit exceeds $60K–$80K.
What is Tennessee's franchise tax?
Tennessee corporations (including S-Corps) pay the $0.04/$100 of net worth franchise tax, with a $300 minimum for entities with taxable net worth over $1M (and $100 minimum under that threshold).
Does Tennessee recognize S Corps?
Tennessee does not fully recognize the federal S Corp election for state tax purposes and treats S Corps as regular corporations for state franchise tax purposes. However, Tennessee has no personal income tax, so the state-level impact is limited to the franchise tax.
04 · Compare against
Run the model against another state.
05 · Methodology