What are the tax differences between an LLC and a corporation?

The fundamental tax difference is that LLCs use pass-through taxation (profits taxed once on the owner's personal return at 10-37%) while C-Corporations face double taxation (profits taxed at 21% corporate rate, then dividends taxed again at 15-20% when distributed to shareholders). An LLC owner earning $100,000 might pay $30,000 in total tax; a C-Corp owner might pay $21,000 + $11,850 = $32,850.

Detailed comparison: LLC (default): all net income passes through to owner's personal return, subject to self-employment tax (15.3%) + income tax (10-37%). No separate entity-level tax. LLC (S-Corp election): reasonable salary subject to payroll tax, remaining profits distributed without SE tax. C-Corporation: entity pays 21% flat federal tax on profits; shareholders pay 0-20% qualified dividend tax on distributions. C-Corp advantage: retained earnings are taxed at only 21% (vs. up to 37% for pass-through), making C-Corps better for businesses that reinvest heavily rather than distribute profits. The QSBS exclusion can also eliminate up to $10M in capital gains tax when selling C-Corp shares held 5+ years.