Reasonable salary lookup
If you own an S corp and work in it, the IRS expects a reasonable salary before you take distributions. Pick the job you actually do and your state, and see a defensible starting point from government wage data.
How this number is built
The Bureau of Labor Statistics surveys what employers actually pay in every occupation and state. This lookup uses the 25th percentile: a quarter of people in that job in your state earn less, and three quarters earn more. It's the low end of real pay, backed by government data, which makes it a defensible starting point for an owner's salary.
It's a floor to start from, not a ceiling. Years of experience, a larger business, more responsibility or more hours can all justify paying yourself more.
See what this salary saves with the S corp savings calculator →
Common questions
What makes a salary reasonable?
Roughly what the business would have to pay someone else to do the work you do, given your duties, your hours and local pay. Government wage data for your occupation and state is common evidence, alongside salary surveys and job listings.
What if I do more than one job in my business?
Split your time between the roles you actually perform and weight each role's pay by its share of your hours. Most owners spend part of their time managing and part doing the work itself.
Can I pay myself less than this?
You can, but the lower you go below what your work is worth, the harder it is to defend. The IRS can treat distributions as wages, with back payroll tax and penalties. Read the full guide to setting a reasonable salary.
What records should I keep?
The wage data you used, its date and source, a description of your duties and hours, and payroll run on a regular schedule. Keep it each year so you can show how the salary was set.
Cratchit suggests the lowest salary you can defend for each of your companies from your role and state, shows what it means for your payroll tax, and keeps the dated record that backs it. Take a guided tour with the Harpers, a sample family.
Try the demoEducation, not advice. Confirm your salary with your CPA.