Total Tax Burden
$28,524
Effective Rate
Tax Savings vs SE
$9,083
Salary FICA
$9,222
Distribution (FICA-Free)
$90,000
Summary
With $150,000 in S-Corp income split into $60,000 salary and $90,000 distributions, your total tax is $28,524 — saving $9,083 compared to paying full SE tax.
The IRS requires S-Corp shareholders who perform services to pay themselves a "reasonable salary" before taking distributions. Setting salary too low can trigger audits and penalties.
By splitting $150,000 into $60,000 salary and $90,000 distributions, you save $9,083 compared to paying SE tax on the full amount.
Your $90,000 in distributions avoids FICA taxes (15.3%), saving the payroll tax that would otherwise apply if taken as salary or SE income.
S-Corp distributions of $90,000 qualify for the QBI deduction, providing an additional $18,000 deduction from taxable income.
Tax Comparison by Structure
Side-by-Side Comparison
3 rows
| Scenario | Payroll / SE Tax | Income Tax | Total Tax | Effective Rate |
|---|---|---|---|---|
| S-Corp Split | $9,222 | $19,302 | $28,524 | 19.02% |
| All as SE | $21,194 | $16,413 | $37,608 | 25.07% |
| All as Salary | $22,992 | $21,970 | $44,962 | 29.97% |
Estimate based on federal taxes only. Includes employer payroll taxes (SS, Medicare, FUTA) as part of the S-Corp cost. Does not include state taxes, payroll administration costs, or accounting fees. Not tax advice.