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S-corp salary and payroll tax

2026 figures · nothing you type leaves your browser

Business profit before your salary Salary you'd pay yourself Extra cost of running payroll and an S-corp return

How it works

As a sole proprietor or LLC, self-employment tax is 15.3% of 92.35% of profit (the 12.4% Social Security part stops at $184,500 in 2026). As an S corporation, payroll tax applies only to the salary; the rest comes out as a distribution. The IRS requires a reasonable salary for the work you do — pick one you could defend with what similar roles pay. This leaves out income-tax effects (the QBI deduction shrinks as salary rises).