How the calculator works
Describe what you actually do
List the tasks you perform in the business — bookkeeping, sales, client work, operations, admin — and roughly how your time divides across them. No financial statements required to start.
We match each task to BLS wage data
Each task is mapped to a Standard Occupational Classification code and priced against the Bureau of Labor Statistics wage survey for your metro area and experience level.
Get your defensible number — and the report
The calculator returns a reasonable salary figure backed by every source it used, and produces a documented report you can hand to your CPA or attach to your corporate minutes.
Why a percentage calculator isn’t enough
Most “S-corp salary calculators” just apply a fixed ratio — pay yourself 60% of profit, take 40% as distributions. That 60/40 rule is a myth: it has no basis in the tax code, IRS guidance, or case law, and the Tax Court has rejected mechanical formulas. A number derived from a percentage of profit can be challenged precisely because it ignores what the work is worth.
The defensible question isn’t “what percentage?” — it’s what would it cost to hire someone to do your job? That’s the standard the regulations set, and it’s what this calculator answers, using the same BLS-data methodology the IRS Job Aid contemplates. For the full background on the standard, see our guide to S-corp reasonable compensation.
Calculator FAQ
You can run the WageProof calculator and see your reasonable salary figure before you pay — payment is only required to download the finished, documented report. A truly free one-number 'calculator' that spits out a percentage of profit is exactly what gets owners in trouble in an audit; a defensible figure has to be tied to your actual duties and market wage data.
Start the calculator →It uses the methods the IRS recognizes: it breaks your role into tasks (the Cost Approach) or matches your overall role to a comparable occupation (the Market Approach), prices each against BLS Occupational Employment and Wage Statistics data for your metro area, and adjusts for your experience level. The result is the market wage for the work you actually do.
See the full methodology →Your business location (for the right metro wage data), a description of your duties and how your time splits across them, and your experience level for each. That's enough to produce a defensible estimate — you don't need to enter revenue or upload financials to get a number.
The figure is built from published BLS wage data matched to your duties, and the report documents every source and the methodology behind it — the contemporaneous, market-based record examiners look for. Reasonable compensation is a facts-and-circumstances determination, so no tool can guarantee an audit outcome, but a documented number is far stronger than a guess. It is not a substitute for advice from your own tax professional.
How the IRS defines reasonable comp →The 60/40 rule (and every other fixed salary-to-distribution ratio) has no basis in the tax code, IRS guidance, or case law, and the Tax Court has rejected mechanical formulas. This calculator doesn't use a ratio — it values the actual work you do against real market wage data, which is what the regulations require.
Why the 60/40 rule is a myth →Not legal or tax advice. The calculator produces a market-data estimate to support your reasonable-compensation decision; the right figure depends on the full facts of your business. Consult a qualified tax professional before setting your salary.