Free Tool
S-Corp Reasonable Salary & Tax Savings Calculator
See roughly how much self-employment (payroll) tax an S-Corp election could save a construction or real estate owner — using the honest, wage-base-aware math, not the oversimplified version.
$
What the business nets before paying you.
$
What you'd pay yourself as a W-2 wage in an S-Corp.
Estimated annual payroll-tax savings
$9,599
per year — and it repeats every year
How that's calculated
- Self-employment tax as a sole proprietor / default LLC
- $32,549
- Payroll tax on your salary as an S-Corp
- − $22,950
- Profit taken as distributions (no SE/payroll tax)
- $250,000
- Estimated annual savings
- $9,599
Read this before you rely on the number
- This is an illustration, not tax advice, and not a promise. Your real result depends on your state, filing status, other income, and the current-year Social Security wage base (which changes annually).
- The savings above come mostly from the uncapped Medicare portion once your salary reaches the wage base — which is why the honest number is smaller than the '15.3% of distributions' shortcut you'll see elsewhere.
- An S-Corp adds real costs: payroll, a separate return, and more compliance. Those have to be worth it, which is usually true once profit is consistent but not at the very bottom.
- The reasonable-salary figure is the whole game. Set with market data and documented, it holds up; guessed at, it's a liability.
Want a defensible salary and the full plan?
The calculator shows the opportunity. On a free strategy call we'll set a reasonable salary that holds up, run your real numbers, and coordinate it with your entity, retirement, and the rest of your tax plan — books and taxes under one roof.
Book a Strategy CallLearn more
- How contractors legally reduce self-employment tax
- LLC vs. S-Corp for construction
- How to pay yourself as an owner
Illustration only, based on approximate federal payroll-tax rates and a wage base of $176,100. Not tax advice.