Free Tax Tool

Family Wage Savings Calculator

See what hiring your child legitimately into your business could save your family this year, and what it could become by the time they retire. Want the full playbook? Read our guide to the tax breaks for hiring your children.
Your scenario

Adjust to see your numbers update in real time.

Business entity type
Your marginal federal tax rate

Choose the rate that applies to your highest dollar of income.

$

Pay a rate you can defend. Inflated wages are the fastest path to losing the deduction.

yrs

Under 18 unlocks the FICA exemption (sole prop / parent-only partnership only). Under 21 unlocks FUTA exemption.

Fill in all the details of your scenario to see your savings.
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Breakdown

Where the math actually lives

Same wages, same child, same parent
Sole prop / Parent-only partnership

FICA exempt under 18 · FUTA exempt under 21

$0
Net family savings

S-Corp (or C-Corp)

All payroll taxes apply at every age

$0
Net family savings

Don't read this as "go sole prop." Hiring your child in isolation always looks better in a sole prop because of the FICA and FUTA exemptions, and because the wage deduction reduces self-employment income. But most owners in the bracket where this strategy meaningfully helps are already saving far more in SE tax by being an S-Corp on the rest of their business income than this single comparison can show. For most readers, the S-Corp number is the realistic baseline, and the right question isn't "which entity wins this comparison" but "is hiring my child worth doing inside the entity I already have?"

If those wages fund a Roth IRA, the compounding does the rest

Earned wages support a Roth IRA contribution up to the lesser of wages or the 2026 limit of $7,500. Project what happens if you keep it up.

$
yrs
Projected value at age 65$0

How the math works. Estimates use 2026 federal parameters: $16,100 single standard deduction (dependents capped at the greater of $1,350 or earned income + $450, not to exceed $16,100), $184,500 Social Security wage base, 7.65% FICA (each side), 0.6% effective FUTA on first $7,000, and the 2026 single bracket table. The SE-tax calculation includes the half-SE-tax deduction effect. Figures intentionally exclude QBI deduction interaction, state and local taxes, the additional Medicare tax (0.9% above $200K single / $250K MFJ), and other planning layers. These can move your number meaningfully in either direction. This calculator is an educational estimate, not tax advice. Your actual results depend on facts your CPA needs to see.