Small Business Tax Estimator
Project your combined federal income tax, self-employment tax, and Section 199A QBI deduction as a sole proprietor, LLC, or S-corp.
What Is the Small Business Tax Estimator?
This estimator projects your combined federal tax burden as a small business owner by calculating three distinct obligations: (1) federal income tax using the graduated bracket system under IRC Section 1, (2) self-employment tax under IRC Sections 1401-1403 covering the employer and employee portions of Social Security (12.4% on earnings up to the $176,100 wage base for 2025) and Medicare (2.9% uncapped, plus the 0.9% Additional Medicare Tax on earnings exceeding $200,000/$250,000 for joint filers), and (3) the potential Section 199A Qualified Business Income deduction that allows eligible pass-through entities to deduct up to 20% of QBI. The tool handles the deductible half of SE tax on line 15 of Schedule 1, which reduces your adjusted gross income before computing income tax. For 2025, the standard deduction is $15,000 for single filers and $30,000 for married filing jointly. The estimator uses current-year brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. It accounts for the QBI phase-out thresholds for specified service trades or businesses (SSTBs) beginning at $191,950 (single) and $383,900 (MFJ) of taxable income. This is a planning tool for sole proprietors, single-member LLCs, partnerships, and S-corporation shareholders receiving guaranteed payments or distributive shares.
How to Use This Calculator
Enter Gross Revenue
Input your total business receipts before any deductions. This is your top-line revenue as reported on Schedule C line 1 or Form 1120-S.
Subtract Business Expenses
Enter total deductible business expenses including cost of goods sold, payroll, rent, insurance, supplies, and depreciation.
Select Filing Status and Income
Choose your filing status and add any W-2 wages or other non-business income that affects your bracket placement.
Review the Breakdown
The calculator produces your SE tax, income tax after the QBI deduction, total liability, and effective rate so you can plan quarterly estimated payments.
Key Concepts
Self-Employment Tax (IRC 1401)
The combined 15.3% tax (12.4% Social Security + 2.9% Medicare) on net self-employment earnings. You deduct 50% of SE tax from AGI under IRC Section 164(f).
QBI Deduction (Section 199A)
Pass-through owners may deduct up to 20% of qualified business income, subject to W-2 wage and property basis limitations above the income threshold.
Marginal vs. Effective Rate
Your marginal rate applies only to the last dollar earned. Your effective rate is total tax divided by total income and is always lower than the marginal rate.
Additional Medicare Tax
An extra 0.9% Medicare tax applies to self-employment income above $200,000 (single) or $250,000 (MFJ) under IRC Section 3101(b)(2).
Standard Deduction (2025)
$15,000 for single filers, $30,000 for married filing jointly. Reduces taxable income before brackets are applied.
Expert Insights
Effective Rate Reality Check: The most common mistake small business owners make is conflating their marginal bracket with their actual burden. A sole proprietor netting $100,000 in 2025 does not pay 22% on everything -- the first $11,925 is taxed at 10%, the next $36,575 at 12%, and only earnings above $48,475 face the 22% rate. After the standard deduction and half-SE-tax deduction, the effective federal rate is often closer to 18-21% when SE tax is included.
S-Corp Election Strategy: Entity selection is the single most impactful tax decision for a profitable small business. An S-corporation election under IRC Section 1362 can save thousands in SE tax by allowing the owner to take a reasonable salary (subject to FICA) while distributing remaining profits free of self-employment tax. However, S-corps require payroll administration, reasonable compensation analysis, and additional filing costs. The break-even point where S-corp savings exceed compliance costs is typically around $60,000-$80,000 in net profit, though this varies by state.
Quarterly Payment Reminder: Run this estimator at least quarterly. If your projected total tax exceeds $1,000, you are required to make estimated payments (Form 1040-ES) by April 15, June 15, September 15, and January 15 to avoid the IRC Section 6654 underpayment penalty.
Frequently Asked Questions
This calculator provides estimates for educational purposes only. Tax laws change frequently and individual circumstances vary. These estimates do not constitute tax advice. Consult a qualified CPA or tax professional before making tax-related decisions.
Run These Numbers Too
Quarterly Tax Payment Calculator
Determine the correct Form 1040-ES payment for each quarter based on projected income, deductions, and safe harbor rules under IRC Section 6654.
Self-Employment Tax Calculator
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Section 179 Deduction Calculator
Determine how much of your business equipment purchase you can expense immediately under IRC Section 179 instead of depreciating over multiple years.
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