Calculators
S Corp Salary and Distribution Calculator
Split S corporation profit into salary and distributions and estimate the payroll tax saved compared with self-employment tax.
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The tool
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What people use it for
- Setting an S corp owner salary
- Checking whether an S corp election pays off
- Year-end distribution planning
- Discussions with an accountant
About this tool
What the S Corp Salary and Distribution Calculator does
S corporation owners who work in the business take a salary, subject to payroll taxes, and can take remaining profit as distributions, which are not. This calculator shows the payroll tax on your chosen salary, the distribution left, and the saving against paying self-employment tax on all profit.
Formula
- Payroll tax = 12.4% of salary up to the wage base + 2.9% of salary
- Distribution = profit − salary − employer half of payroll tax
- Saving = SE tax on all profit − payroll tax − extra costs
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Profit before owner salary | $120,000 |
| Reasonable salary | $60,000 |
| Social Security wage base | $184,500 |
| Extra payroll and accounting cost | $1,500 |
| Result | Value |
|---|---|
| Net payroll tax saving | $6,275 |
| Distribution | $55,410 |
| Payroll taxes on salary | $9,180 |
| SE tax if taxed as sole proprietor | $16,955 |
| Salary as share of profit | 50.0% |
How to read the result
The salary must be reasonable for the work performed, often judged against what you would pay someone else to do your role.
A lower salary also lowers Social Security credits and limits some retirement contributions based on wages, so the cheapest salary is not always best.
Estimates only, not tax advice. Rates and thresholds change; confirm current figures with your tax authority or adviser.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
A reasonable salary for the services you provide, based on what similar roles are paid.
They are subject to income tax but not to payroll or self-employment tax.
The difference between self-employment tax on all profit and payroll tax on the salary, less extra running costs.
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