The S-Corp Unlock

There's two business owners in the same industry making $1M/year.

But one will pay $75,000 less in taxes.

Owner A is a sole proprietor — estimated taxes around $474K. Owner B elected S-Corp status — estimated taxes around $400K.

A single form makes all the difference. And for a lot of you, the deadline to file it is March 15th.

Everyone knows the S-Corp election for payroll tax reduction. Pay yourself a reasonable W-2 salary. Take the rest as a distribution. The salary pays payroll taxes. The distribution doesn't.

But the payroll savings aren't even the most powerful part. Here are two unlocks most people miss:

Unlock #1 — The QBI Deduction

The Qualified Business Income deduction lets eligible business owners deduct 20% of their business income. But there are two key catches.

1) Phaseouts. Above $201K (single) or $402K (married), the deduction phases out unless you have W-2 wages on the books.

2) Not every business qualifies. The IRS splits businesses into two camps:

• Specified Service Trades or Businesses (SSTBs): Businesses where income is tied directly to someone's professional expertise — doctors, lawyers, accountants, financial advisors, consultants. Above the income phaseout, SSTBs lose the deduction entirely.
• Non-SSTBs: For everyone else, the deduction survives above the phaseout, but only with W-2 wages on the books.

So if you're above the phaseout and non-SSTB, the S-Corp election helps restore the QBI deduction.

Unlock #2 — The Pass-Through Entity Tax (PTET)

The SALT cap in 2026 is $40,400, and above $505,000 it starts phasing down to a $10,000 floor. But there's a workaround to completely sidestep it.

You can elect into your state's Pass Through Entity Tax (PTET). Instead of paying state tax on your business income through your personal return, your S-Corp pays state taxes on pass-through profits directly.

That payment becomes a business expense and is fully deductible at the federal level — completely outside the SALT cap.

What's key: to qualify, you need to be taxed as an S-Corp or partnership.

The Full Picture

Owner A — no payroll tax optimization, no QBI deduction (above phaseout, no W-2 wages), no PTET access. Est. taxes: ~$474K.

Owner B — payroll tax savings (~$33K), QBI deduction restored (~$26K), PTET election (~$29K), minus entity/admin costs (~$12K). Est. taxes: ~$399K.

$75K in additional savings — and they still have more levers to pull.

Upcoming Election Deadline

Under $150K in profit? Likely not worth it — payroll, tax prep, and state filing costs eat the savings.

Over $150K? Worth a review. Check your state's rules, admin costs, and SSTB status before filing Form 2553 with the IRS. The deadline is March 15th, but late elections are possible with reasonable cause — or plan for January 1 of next year.

It all starts with a single form.

PS — I go deeper into S-Corps, QBI Deduction, and PTET in the 2026 Playbook.

PPS — If you want to see how these strategies apply to your situation, I give free personalized financial playbooks — a clear list of exactly what to do next. Here's the link if you want to get started.

This newsletter is provided for general educational and informational purposes only and does not constitute tax, legal, or investment advice. Every individual's tax situation is different. You should consult with your own qualified tax advisor, CPA, or attorney before making any tax elections or financial decisions. Lindy Wealth is a registered investment adviser. Registration does not imply a certain level of skill or training. Nothing in this communication should be construed as a solicitation, offer, or recommendation to buy or sell any security or investment product.