S-Corp Election Tax Savings Calculator for Dentists

If you operate your dental practice as a sole proprietor or single-member LLC, you pay self-employment tax (15.3%) on every dollar of net income. Electing S-corp tax status lets you split that income into a W-2 salary — subject to FICA — and owner distributions, which are not. For a practice owner netting $300K–$600K, that gap is typically $10K–$35K in annual tax savings.

This calculator uses 2026 FICA rates and the $184,500 Social Security wage base.⁴

Why the S-corp election works

Self-employment tax funds Social Security and Medicare. As a sole proprietor or SMLLC, you pay it on your entire net practice income — 15.3% on the first $184,500 of SE-adjusted income, 2.9% above that, plus a 0.9% surtax above $200K (single) or $250K (married).¹

An S-corp changes the structure. You pay yourself a W-2 salary (FICA applies to that). The remaining profit flows out as an owner distribution — which is not subject to FICA. The IRS requires the salary to be "reasonable compensation" for the clinical work you perform, but everything above that benchmark is distribution at zero employment-tax cost.²

What counts as "reasonable compensation" for a dentist?

The IRS does not publish a table. Their standard is the amount a similar business would pay for comparable services in similar circumstances.² For a clinical dentist, the clearest benchmarks are:

• 30–35% of your personal clinical production. This mirrors what an associate earns for performing the same work. If you personally generate $500K of collections, that implies $150K–$175K of reasonable comp.
• BLS and ADA salary data for dentists in your region. The BLS median for full-time general dentists is in the $175K–$220K range; specialists run higher. Your salary should be defensible against comparable market data.
• The cost to replace your clinical production. If you'd need to hire two part-time associates at $130K each to cover your chair time, $260K may be reasonable comp for a high-producing owner.

The IRS's concern is token salaries — paying yourself $40K on $500K net income is an audit target. A reasonable, documented salary of $140K–$180K on $400K–$600K net income is defensible. Build a compensation memo: your title, duties, hours, and the comparable salary data you used.

What the calculator doesn't include

• State payroll taxes. Some states (California, New York, etc.) impose SDI or UI taxes on W-2 wages. These add modestly to admin burden and cost.
• QBI deduction interaction. Under OBBBA (effective 2025), the §199A QBI deduction is permanent at 23% for pass-through income. W-2 salary reduces your QBI-eligible income, partially offsetting FICA savings. For most dentists this interaction is small but worth modeling — especially at high income where QBI phaseouts apply.
• Solo 401(k) contribution base changes. When you elect S-corp, your solo 401(k) employee deferral is based on W-2 salary, not net self-employment income. The employer profit-sharing contribution (25% of W-2 comp) may also change. Model your retirement contributions alongside the FICA analysis.
• Income tax deduction interactions. Sole props deduct 50% of SE tax from gross income; S-corps deduct the employer FICA portion. These deductions roughly offset each other — the net savings figure above is a close approximation of your real benefit.
• One-time setup cost. Converting a sole prop or SMLLC to S-corp treatment requires filing Form 2553 and potentially restructuring your entity. Budget $1K–$3K one-time, separate from ongoing admin costs.

Who it makes sense for

The S-corp election is generally worth the admin burden when net practice income exceeds roughly $80K above your reasonable salary. Below that level, the gross FICA savings are likely smaller than the admin costs.

Estimates use MFJ filing status and $2,500 admin costs. Gross savings only — enter your numbers above for a precise figure.

How to elect S-corp status

1. Confirm eligibility. S-corp election is available to sole proprietors, LLCs, and existing C-corps. Professional practices in most states can operate as a PLLC taxed as an S-corp (no need to form a separate corporation).
2. File Form 2553. The IRS election form. For a calendar-year practice, file by March 15 to be treated as an S-corp for the entire current year. Late elections are available under Rev. Proc. 2013-30 in many circumstances.³
3. Set up payroll. You must actually run payroll at your reasonable salary — federal withholding, FICA deposits, and W-2 at year-end. Gusto and ADP both handle dental-practice payroll for $50–$100/month.
4. Document reasonable comp. A memo in your corporate records: your title, duties, weekly hours, and the market data used to set your salary. Update it annually.
5. Coordinate with your CPA. S-corp basis tracking, estimated tax adjustments, QBI optimization, and retirement contribution changes all need a one-time recalibration. A dental-focused advisor or CPA can model this holistically.