Article Date:
July 2022

Word Count:



Cut Employment Taxes with the S Corporation

It gets to the point where enough is enough.


As the owner of an unincorporated small business, you may be at that point with the self-employment tax.


For 2022, lawmakers levy the self-employment tax at the painfully high rate of 15.3 percent on the first $147,000 of your net self-employment income:



12.4 percent for the Social Security tax component and


2.9 percent for the Medicare tax component.


The $147,000 Social Security tax ceiling is up from the $142,800 ceiling for 2021, and that ceiling will only worsen. See the SIDEBAR at the end of this article.


Above the $147,000 Social Security tax ceiling, the Medicare tax component of the self-employment tax continues at a 2.9 percent rate before increasing to 3.8 percent at higher levels of net self-employment income, up to infinity, thanks to the 0.9 percent additional Medicare tax.


Of course, you already know all that! But we occasionally need to take a fresh look at a situation to appreciate how dire it has become.


Say your self-employed Schedule C income for 2022 will be $200,000. After multiplying the $200,000 x 92.35 percent on your Schedule SE, you find that your 2022 self-employment tax bill will be a whopping $23,584.1


Oof! That’s a lot of cash down the chute! As the SIDEBAR at the end of the article shows, the Social Security Administration forecasts that the Social Security tax component of the self-employment tax will quickly get much worse.


Have you reached the self-employment tax tipping point? If so, this article shows you how to ... Log in to view full article.

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