QBI vs C-Corp Conversion After-Tax 2027 Calculator
Compare keeping pass-through (S corp / LLC) status with §199A QBI deduction vs converting to C corp for 2027.
Why Entity Choice Matters in 2027
For 2027, both options have stable rules: §199A QBI deduction is PERMANENT (under OBBB), and the corporate flat tax rate of 21% remains. The choice hinges on (a) whether you qualify for QBI (SSTB phaseouts), (b) how much profit you need to consume vs reinvest, (c) state tax considerations. Pass-through generally wins for owners who distribute most profit; C corp can win when retaining earnings for growth. Source: IRC §199A, §11. Last updated: May 2026.
Pass-Through Math (S Corp / LLC)
Profit flows to owner's 1040, taxed at ordinary rates (up to 37%), reduced by 20% QBI deduction (if eligible). No double taxation. Owner pays SE tax / FICA on reasonable salary portion only. Best for cash-flow businesses where owner takes most profit personally.
C-Corp Math (Double Tax)
Corporation pays 21% flat federal tax on profit. Owner pays personal tax on dividends at 0/15/20% (qualified) plus 3.8% NIIT if MAGI threshold met. Combined effective rate on distributed profit: ~39.8% (21% + 23.8% on remaining 79%). But retained earnings only pay 21%, then deferred until liquidation.
When C Corp Wins
(1) High-growth startup retaining all earnings for years. (2) SSTB owners above the QBI phaseout (zero §199A deduction makes pass-through worse). (3) International expansion (C corp can use foreign tax credit, GILTI mechanics). (4) Looking for §1202 QSBS exemption (only available to C corp stock). Run the long-term scenario, not just year 1.