Salary vs Distribution Calculator for Construction

Construction company owners are among the biggest beneficiaries of S-Corp tax planning — and among the most likely to get it wrong. The nature of construction means owners often wear multiple hats: estimator, project manager, site supervisor, and business developer. This makes the "reasonable salary" determination both more important and more complex than in other industries. If you are an owner-operator running a $1.5M GC operation, the IRS expects you to pay yourself a salary reflecting the combined value of the roles you fill. A project manager in your market might earn $75,000 and a business development manager $65,000 — but the IRS does not expect you to pay yourself both salaries. A reasonable middle ground for a hands-on construction owner typically falls between $70,000 and $100,000 depending on company size, location, and revenue. Everything above that reasonable salary can be taken as distributions, which are exempt from the 15.3% self-employment tax. On a construction business netting $200,000, the difference between LLC and S-Corp treatment can save $12,000–$15,000 annually in self-employment tax. This calculator models both structures with construction-specific compensation data so you can see exactly where the tax savings emerge and discuss the optimal structure with your CPA.