Free Tax Calculator · 2026 Rates
S-Corp Reasonable
Salary Calculator
Find your IRS-defensible salary range and see exactly how much payroll tax you save at each option.
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Your S-Corp net profit before paying yourself a salary
How reasonable salary works
01
IRS Requirement
S-Corp owner-employees must pay themselves a W-2 salary before taking distributions. The salary must be "reasonable", meaning what you'd pay an outside hire to do your job.
02
40–60% Rule
For service businesses, most CPAs recommend a salary of 40–60% of net profit. Below 40% raises audit risk. Above 60% is safe but reduces your tax savings.
03
Document Everything
Keep records of comparable salaries (BLS data, Glassdoor), your hours worked, and your qualifications. Your CPA should document this in your S-Corp minutes annually.