At what income level does electing S-corp status actually start saving money?

An S-corp saves money by splitting your profit into a "reasonable salary" (subject to ~15.3% payroll tax) and remaining distributions (not subject to self-employment tax). But it adds real costs: payroll processing, a separate business tax return (Form 1120-S), often $1,500–$3,000+ a year in accounting and filing fees, plus state fees. As a rough rule of thumb, the savings usually outweigh the costs once net profit is consistently around $80,000–$100,000 or more, though the exact break-even depends on your reasonable-salary level and state. Below roughly $40,000 of profit, an S-corp almost never pays off. Run the math both ways before electing — the election locks you into payroll obligations. A CPA can model the specific numbers; the tools at wealthserene.com/tools/self-employed-hub can help you frame the question first.