Profit Margin Calculator for US Businesses

A US profit margin calculator computes gross, operating, and net margin after COGS, operating expenses, and federal corporate tax (21% flat for C-corps under TCJA), plus state taxes ranging from 0% (NV, TX, FL) to 11.5% (NJ). IRS Form 1120 and Publication 535 are the authoritative references.

US profit margin math has two complications absent in most other markets: the federal-plus-state tax stack, and pass-through versus C-corp treatment.

For C-corps, the federal rate is a flat 21% post-TCJA. State rates range from 0% (Nevada, Texas, Washington — Texas has a separate franchise tax) to 11.5% (New Jersey), so the blended rate depends on nexus. The calculator lets you set an effective combined rate so net margin output reflects what actually hits retained earnings.

For pass-through entities (S-corp, LLC, partnership, sole prop), the entity pays no federal income tax — profit flows to the personal 1040 and is taxed at marginal rates from 10% to 37%, plus 15.3% self-employment tax on the first $168,600 of SE income (2024 Social Security wage base) and 2.9% Medicare above (with an additional 0.9% above $200k). Net margin for pass-throughs is conventionally calculated pre-personal-tax.

COGS under US GAAP includes direct materials, direct labor, and manufacturing overhead. Section 263A (UNICAP) rules force resellers and manufacturers with average receipts above $29M (2024 threshold) to capitalize more indirect costs into inventory.

Net-margin benchmarks (IRS Statistics of Income and NYU Stern industry tables): - Software / SaaS: 15-25% - Professional services: 10-20% - Retail (non-grocery): 2-5% - Restaurants: 3-9% - Construction: 5-10%

The single biggest US-specific lever past $1M revenue is electing S-corp status (if eligible) to escape SE tax on a reasonable-salary versus distribution split — the calculator's scenario toggle models this. For underlying rules, IRS Publication 535, Form 1120 instructions, and the Schedule SE instructions are authoritative.