C-Corporation — Double Taxation on Dividends:
The corporation first pays 21% federal income tax on net profit.
Dividends paid to shareholders come from after-tax corporate profit and are then taxed again at the shareholder's qualified dividend rate: 0%, 15%, or 20% (depending on total income).
The W-2 salary is deductible to the corporation — reducing corporate taxable income — and taxed as ordinary income to you personally.
Distributions are not deductible to the corporation.
Net profit
$0
−
Salary
$0
−
Distribution
$0
−
Retirement
$0
=
Left in business
$0
W-2 Salary
$0
—% of profit
Distribution
$0
—% of profit
Retirement
$0
SEP / 401(k)
Health + Benefits
$0
Tax deductible
Compensation as % of profit
Total owner comp
—
Salary + dist + benefits
As % of profit
—
—
Left in business
—
After all compensation
Est. personal tax
—
Fed income + SE/FICA
Take-home (after tax)
—
Cash in your pocket
Living expense coverage
—
—
Full compensation & tax breakdown
Compensation optimization checklist
Enter your business profit and compensation structure
Fill in your net profit, salary, distributions, and benefit amounts to see your total compensation, personal tax estimate, and take-home pay.
Planning estimate only. Tax calculations use simplified federal brackets (2023–2026 verified IRS figures). Does not account for AMT, state income tax, tax credits, phaseouts, or all deduction limits. S-Corp salary must meet IRS reasonable compensation standards. C-Corp owner salary is deductible to the corporation; distributions (dividends) are not. Always finalize compensation structure with your CPA before implementation.