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S-Corp Salary vs. Shareholder Dividend Calculator (Reasonable Salary Method)

Updated: Feb 3

Common S Corp Salary/Dividend splits:

60% salary/40% distribution or

50% business income paid in salary/50% dividend


The following formula is used to calculate a reasonable salary:

Reasonable Salary Method=(Experience∗Industry Average Salary)/Hours Worked Per Week




See Also: IRS Non-Profits