Last updated: July 14, 2026
Texas S-corp savings calculator
Enter your annual net self-employment income (after business expenses).
$
Self-employment tax as a sole prop / LLC$16,955
FICA on your S-corp salary (60% = $72,000)$11,016
Distributions (SE-tax-free)Not subject to FICA/SE tax$48,000
Federal SE-tax saved$5,939
Payroll + tax-prep admin−$2,500
TX minimum franchise / LLC fee−$0
Net TX S-corp savings / year$3,439
At $120,000 of net SE income, electing S-corp status pencils out in Texas — it generally starts paying off around $52,000 of net SE income.
Estimate for planning — federal SE tax + Texas S-corp/franchise cost only; confirm reasonable-compensation with a CPA before electing.
The rules
Texas self-employment & S-corp rules
- State income tax: no state income tax. Self-employment tax itself (15.3%) is federal and identical in every state.
- Minimum franchise / LLC fee: $0/year for an LLC or S-corp in Texas, regardless of income.
- Also note: Texas has no income tax but imposes a franchise (margin) tax on revenue above the ~$2.65M no-tax threshold (2026), regardless of entity type — not modeled in the savings above.
- PTET (SALT-cap workaround): Not relevant in Texas — with no state income tax, there's nothing for a PTET election to deduct. The federal S-corp SE-tax savings above still apply.
- No state income tax. Higher property tax and high sales tax (8.2% combined avg) compensate.
- Annual Texas Franchise Tax on businesses with > $2.65M in revenue (2026).
- Homestead exemption + Sec. 25.18 caps annual assessment increases on primary residences.
Questions
Frequently asked questions
How much self-employment tax will I pay in Texas?▾
Self-employment tax is federal — 15.3% (12.4% Social Security up to the $184,500 wage base + 2.9% Medicare) on 92.35% of your net self-employment income, the same in Texas as everywhere. Texas then taxes that same income at its state income-tax rate (none — no state income tax). The calculator above shows your SE tax at any income.
Is an S-corp worth it for a Texas freelancer or LLC owner?▾
In Texas, electing S-corp status generally starts saving money once net self-employment income is around $52,000. Below that, the payroll/admin cost outweighs the self-employment-tax savings.
Does Texas have a PTET (SALT-cap workaround)?▾
Texas does not currently offer a pass-through entity tax (PTET) election, so the federal SALT cap ($40,400 for 2026, phasing down toward $10,000 above ~$505,000 of MAGI) applies to state taxes paid personally.
How is my "reasonable salary" set for an S-corp?▾
The IRS requires S-corp owner-employees to pay themselves a reasonable salary (subject to FICA) before taking distributions. This calculator assumes 60% salary / 40% distributions as an illustration — your actual reasonable compensation depends on your role and industry and should be set with a CPA.