2026 tax year · New Hampshire
Is an S-corp election worth it in New Hampshire?
New Hampshire does not recognize the federal S election. It taxes the company as a C corporation, so electing here creates a state tax rather than avoiding one.
Work it out on your own numbers
The figures below use $100,000 of profit and our standard assumptions. Put your own in instead, this compares staying a sole proprietor against electing, with New Hampshire's own charges on the company included:
Salary share and withdrawal share are percentages. The withdrawal figure only affects the C corporation, it is what decides whether the second layer of tax applies at all.
Enter your figures above and press Compare.
What the election is worth on $100,000 of profit
A single filer taking the standard deduction, paying themselves 40% of profit as salary, with $1,500 a year of payroll and filing cost:
| Tax as a sole proprietor | $22,365 |
| Tax as an S-corp, federal and personal state | $17,147 |
| Saving from the payroll-tax split alone | $5,218 |
| What New Hampshire charges the company | − $7,500 |
| Net cost | $2,282 worse off |
New Hampshire charges the company 7.5% of net income.
- A threshold this calculator cannot check. Part of New Hampshire's charge only applies above $109,000 of receipts or base, which depends on turnover rather than profit. The figure above assumes you are below it.
The profit range where it actually pays in New Hampshire
On these assumptions the election does not pay for itself at any profit up to $500,000 in New Hampshire. What New Hampshire charges the company outweighs the payroll-tax saving throughout.
| Net profit | Sole proprietor | S-corp, all in | Difference |
|---|---|---|---|
| $60,000 | $12,037 | $13,428 | costs $1,390 |
| $100,000 | $22,365 | $24,647 | costs $2,282 |
| $150,000 | $37,608 | $40,882 | costs $3,275 |
| $250,000 | $65,815 | $77,270 | costs $11,455 |
What New Hampshire does differently
New Hampshire levies no personal income tax, so the entire question here is federal. The election saves payroll tax on the distribution and nothing else, there is no state layer for it to move, and no state return for the S-corp's owners to reconcile.
The New Hampshire detail
New Hampshire ignores the federal S election entirely, an S corp is taxed like a C corp under the Business Profits Tax at 7.5% on apportioned taxable business profits, with federal Schedule K flow-through items pulled back into the entity's income. A BPT return is required once gross business income exceeds $109,000 (from 1/1/2025, next indexed 1/1/2027). On top, the Business Enterprise Tax applies at 0.55% of compensation + interest + dividends paid once gross receipts or that base exceeds $298,000; BET paid is creditable against BPT. No dollar minimum. Because there is no state personal income tax, profits are not taxed again at shareholder level.
How much salary to pay yourself
Enter your figures above and press Calculate.
Less salary means less payroll tax, so the arithmetic always points at the smallest salary you can justify. That is exactly why it is not a number to optimize: compensation has to be reasonable for the work you do, and the penalty for getting it wrong is reclassification plus back payroll tax. The cheapest row here is the riskiest one.
| Salary share | Salary | Distribution | Total tax | vs sole proprietor |
|---|---|---|---|---|
| 20% | $20,000 | $76,970 | $13,543 | $8,821 |
| 30% | $30,000 | $66,205 | $15,345 | $7,019 |
| 40% | $40,000 | $55,440 | $17,147 | $5,218 |
| 50% | $50,000 | $44,675 | $18,949 | $3,416 |
| 60% | $60,000 | $33,910 | $20,750 | $1,614 |
What this assumes
- Single filer, standard deduction, the business as the only income.
- 40% of profit taken as salary in the headline figures.
- $1,500 a year for payroll and a separate 1120-S, a cost estimate, not a tax figure, and it varies by provider.
- Comparing against a sole proprietorship. If you already trade through an LLC, some state fees are owed either way and are not a cost of electing.
- Anything listed as not modeled above is genuinely owed, it is excluded because it does not depend on profit, not because it is nil.
What these words mean
- Gross receipts
- Everything the business took in, before subtracting any costs. A tax on gross receipts is owed even by a business making a loss, which is what makes it different from a tax on profit.
- C corporation
- A company taxed as a separate taxpayer in its own right, so profit is taxed once to the company and again to the owner when paid out. The thing an S corporation election is meant to avoid.
- S corporation election
- Asking the tax office to treat your company as a pass-through, so profit is taxed to you rather than to the company. The owner takes a salary and the rest as a distribution, which is what saves payroll tax.
- Distribution
- Profit paid out to a company’s owner that is not salary. It is not subject to payroll or self-employment tax, which is the whole point of the S corporation election. And why the salary has to be defensible.