Free tool
S-Corp salary calculator
Find an IRS-defensible W-2 salary range based on your business revenue and role. The IRS expects S-corp owners to take reasonable compensation — use this to set a defensible number before your CPA files.
Educational estimate — not tax advice. Confirm salary with your CPA.
S-Corp Planning
What's a defensible W-2 salary for your S-corp?
Adjust your revenue and role to see IRS-defensible salary ranges. The IRS scrutinizes S-corp owners who take too little salary — this shows the zone the IRS expects.
Your situation
Before your S-corp salary
IRS-Defensible Range
Minimum Salary
$53,000
Recommended Salary
$68,000
Maximum Salary
$83,000
Annual Tax Savings
Self-Employment Tax Saved
$11,586
Total Tax Savings
$11,586
Breakdown
How we calculated this
Reasonable compensation is typically 40–60% of net business income for the owner, depending on your role and industry. The IRS expects owners to take enough salary to match the work they do. Too little salary invites an audit. We use industry benchmarks for your role to set defensible ranges — this is not a final answer, but a starting point for discussion with your CPA.
What to do with this
At $150,000 in net profit, a $68,000 salary saves roughly $11,586/year compared to taking everything as owner distributions. After payroll processing costs (typically $1,500–2,000/year), net benefit is around $9,836. If you haven't elected S-corp status yet, that's the first step — file Form 2553 with the IRS. Then set up payroll and use this salary range as your starting point.
Also read
S-Corp Reasonable Compensation: What the IRS Actually Requires and How to Set Your Salary
The IRS requires S-corp owners to pay themselves a 'reasonable salary' — and has audit procedures to enforce it. What factors the IRS considers, how auditors typically approach S-corp compensation cases, and a practical method for setting a defensible number.
Read S-corp planningHow to Actually Pay Yourself From an S-Corp
S-corp owners get paid two ways: W-2 salary through payroll, and distributions from the business account. What each one is, how to set them up, and what the IRS expects.
Read S-corp planningThe S-Corp Accountable Plan: Reimburse Yourself Tax-Free for Business Expenses
S-corp owners can't deduct unreimbursed employee expenses on their personal return. An Accountable Plan lets the corporation reimburse you for home office, vehicle, phone, and other expenses — tax-free to you, deductible by the corporation.
Read