TX · Tax year 2026 · Last reviewed 2026-08-24
LLC vs S Corp in Texas: Tax Savings Calculator.
Compare federal payroll taxes, self-employment taxes, Texas ’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 Texas's recurring cost, the estimated net modeled benefit (yr 1) is$9,105.
LLC Filing Fee
$300
one-time, Texas 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 · Texas 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).
Texas LLC recurring fee (deducted from savings)
$0
TX: $0 when annualized revenue ≤ $2.65M; 0.375% above.
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
- − Texas 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 $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 Texas's $0 franchise tax when annualized revenue ≤ $2.65M (TBOC § 171.002; Texas Comptroller); 0.375% of taxable margin above the threshold and the one-time $300 Texas LLC filing fee (setup cost, not deducted from the year-1 net benefit). They do not include federal individual income tax (Texas 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 Texas 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. Texas charges $0per 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 Texas annual fee, the estimated net modeled benefit is$9,105.
State-specific note: Texas has no state individual income tax. The Texas franchise tax has a NO-TAX-DUE threshold for entities with annualized total revenue ≤ $2.65M (TBOC § 171.002; Texas Comptroller). The calculator models $0/yr when net profit is below $2.65M, and the standard 0.375% franchise tax rate above that threshold. This calculator's $0/yr default reflects the typical small-business case.
Localized formula — how this number was calculated
// Texas — 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 $300 to form the entity in Texas.
- Annual franchise / report: $0/yr modeled — confirm with Texas Secretary of State whether a filing is required.
- State income tax: not assessed on individual income.
03 · FAQ
LLC vs S Corp in Texas — frequently asked questions
Common questions about choosing between an LLC and S Corp in Texas, 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 Texas?
Texas charges a $300 filing fee to form an LLC. Texas has no state individual income tax. The franchise tax has a NO-TAX-DUE threshold for entities with annualized total revenue ≤ $2.65M — most small LLCs owe $0.
Does Texas have a state income tax?
No. Texas has no individual income tax. This means LLC pass-through income and S-Corp distributions are not taxed at the state level, making the federal S-Corp savings especially clean.
Is an S Corp election worth it in Texas?
Yes, and it's particularly attractive because Texas has no state income tax. At $100K net profit, the full federal savings of $5,500–$6,000 flow through without a state income tax reducing them. The franchise tax is $0 for most small businesses under the $2.65M threshold.
What is Texas's franchise tax?
Texas franchise tax is 0.375% of taxable margin, but there is NO TAX DUE for entities with annualized total revenue ≤ $2.65M (TBOC § 171.002). Most small LLCs and S-Corps fall below this threshold.
Do I need a registered agent in Texas?
Yes. Texas requires every LLC to have a registered agent with a physical Texas street address. You can serve as your own agent if you're a Texas resident.
05 · Methodology