Should I take an owner draw or a salary?

People search for an owner draw versus salary calculator when the same dollars can leave the business as wages or as a draw.

The two paths do not hit payroll tax the same way. IRS Topic 554 taxes 92.35% of net self-employment earnings at 15.3% (12.4% Social Security plus 2.9% Medicare). You usually owe that tax when net earnings are $400 or more. Publication 15 splits the same 15.3% on wages. The employee pays 7.65%. The employer pays 7.65%. For 2026, Publication 15 and the IRS self-employment tax page put the Social Security wage base at $184,500. Medicare has no wage base.

The owner draw versus salary calculator uses the rates you type. It does not apply the wage base, income tax, or entity rules. Those stay outside the boxes. Change the rates if your year uses different figures.

Draw SE tax = amount × 92.35% × 15.3%

Draw left = amount - SE tax

Salary take-home = amount × (1 - 7.65%)

Employer FICA = amount × 7.65%

Combined FICA = employee FICA + employer FICA

IRS lets you deduct half of the self-employment tax on the income-tax return. That deduction is not subtracted again in these boxes. The boxes also skip income tax. A reserve you set aside from profit, at a rate you choose, is the self-employment tax reserve calculator and the reserve post. What a billed hour keeps after a reserve is the after-tax hourly post.

This is payroll-tax arithmetic on an amount you type. It is not a tax return, and it is not advice to pick a draw or a salary. Reasonable compensation and worker classification follow the IRS pages above.

Example 1: $80,000 either way

Inputs: amount $80,000, employee FICA 7.65%, employer FICA 7.65%, self-employment rate 15.3%, share of earnings taxed 92.35%.

Net earnings for the draw: 80,000 × 0.9235 = $73,880

SE tax: 73,880 × 0.153 = $11,303.64

Draw left: 80,000 - 11,303.64 = $68,696.36

Employee FICA: 80,000 × 0.0765 = $6,120

Salary take-home: 80,000 - 6,120 = $73,880

Employer FICA: $6,120

Combined FICA: 6,120 + 6,120 = $12,240

The paycheck is larger than the draw leftover. Employer FICA sits on the business side of the salary path, so it is not inside the $73,880.

If you and the business are the same pocket, subtract combined FICA from the amount.

Salary pocket: 80,000 - 12,240 = $67,760

Draw pocket: $68,696.36

The draw keeps 68,696.36 - 67,760 = $936.36 more of this payroll-tax comparison.

That $936.36 is the 7.65% the SE formula leaves out before it applies 15.3%. 80,000 × 0.0765 = $6,120. Then 6,120 × 0.153 = $936.36. You can also see it as combined FICA minus SE tax: 12,240 - 11,303.64 = $936.36.

Half of the SE tax is 11,303.64 / 2 = $5,651.82. Topic 554 allows that half as an income-tax deduction. These boxes do not subtract it, and they do not apply a tax rate to it. The $68,696.36 is after SE tax only.

$73,880 of net earnings is under the 2026 Social Security wage base of $184,500, so the flat 15.3% and the flat 7.65% match the wage-base rules on this amount. Example 7 is the amount where they stop matching.

Example 2: $40,000

Same rates. Amount $40,000.

SE tax: 40,000 × 0.9235 × 0.153 = $5,651.82

Draw left: $34,348.18

Salary take-home: 40,000 × (1 - 0.0765) = $36,940

Employer FICA: $3,060

Combined FICA: $6,120

Same pocket on the salary: 40,000 - 6,120 = $33,880

Draw ahead in that pocket: 34,348.18 - 33,880 = $468.18

Half of Example 1’s $936.36 is $468.18. Under the wage base the gap scales with the amount.

Example 3: $60,000, $100,000, and $120,000

Same rates on three larger amounts, all still under the wage-base problem in Example 8.

$60,000. SE tax $8,477.73. Draw left $51,522.27. Salary take-home $55,410. Employer FICA $4,590. Combined FICA $9,180. Same-pocket salary leftover: 60,000 - 9,180 = $50,820. Draw ahead by 51,522.27 - 50,820 = $702.27.

$100,000. SE tax $14,129.55. Draw left $85,870.45. Salary take-home $92,350. Employer FICA $7,650. Combined FICA $15,300. Same-pocket salary leftover: 100,000 - 15,300 = $84,700. Draw ahead by 85,870.45 - 84,700 = $1,170.45.

$120,000. SE tax $16,955.46. Draw left $103,044.54. Salary take-home $110,820. Employer FICA $9,180. Combined FICA $18,360. Same-pocket salary leftover: 120,000 - 18,360 = $101,640. Draw ahead by 103,044.54 - 101,640 = $1,404.54.

Check the scale against the $80,000 gap of $936.36.

60,000 / 80,000 × 936.36 = $702.27

100,000 / 80,000 × 936.36 = $1,170.45

120,000 / 80,000 × 936.36 = $1,404.54

The paycheck stays larger than the draw in every row. The same-pocket comparison goes the other way, by that scaled gap, because employer FICA is counted on the salary and the draw taxes 92.35% rather than 100%.

Example 4: a month typed into a year-sized box

Someone takes about $80,000 a year and types one month, $6,667, with the same rates.

SE tax: $942.02

Draw left: $5,724.98

Salary take-home: $6,156.97

Employer FICA: $510.03

Combined FICA: $1,020.05

Twelve times that month is 6,667 × 12 = $80,004, which is $4 over the $80,000 in Example 1. Twelve times the monthly SE tax is 942.02 × 12 = $11,304.24. Example 1’s SE tax is $11,303.64. The $0.60 difference follows from taxing $80,004 instead of $80,000, plus cent rounding on each monthly run.

The page taxes the number in the box. A month in the box is a month. Run the year when the decision is about the year.

Example 5: $50,000 of wages and a $30,000 draw

The page has one amount. A split year is two runs.

Wages, amount $50,000, same rates.

Salary take-home: $46,175

Employee FICA: 50,000 × 0.0765 = $3,825

Employer FICA: $3,825

Combined FICA: $7,650

Draw, amount $30,000, same rates.

SE tax: $4,238.87

Draw left: $25,761.14

What the person receives, before income tax: 46,175 + 25,761.14 = $71,936.14

Payroll taxes if you add both FICA sides and the SE tax: 3,825 + 3,825 + 4,238.87 = $11,888.87

Set that next to the single-path totals on $80,000 from Example 1.

All draw: SE tax $11,303.64, person keeps $68,696.36

All salary, same pocket: combined FICA $12,240, pocket keeps $67,760

Split, taxes added together: $11,888.87

11,888.87 - 11,303.64 = $585.23

The split costs $585.23 more payroll tax than the all-draw path, and 12,240 - 11,888.87 = $351.13 less than the all-salary path. More of the $80,000 sits on wages, and wages do not get the 92.35% step. The person-received figure of $71,936.14 looks larger than the all-draw leftover because employer FICA on the $50,000 is not in the person’s pocket yet.

S-corp wages and a sole-prop draw do not share one box. Run them as two amounts, then read the IRS pages for which amounts are allowed.

Example 6: $184,500, at the wage base

Amount $184,500. Same flat rates. This is the 2026 Social Security wage base from Publication 15.

The calculator still applies 7.65% and 15.3% to the whole amount.

SE tax: $26,069.02

Draw left: $158,430.98

Salary take-home: $170,385.75

Employer FICA: $14,114.25

Combined FICA: $28,228.50

Same-pocket salary leftover: 184,500 - 28,228.50 = $156,271.50

Draw ahead: 158,430.98 - 156,271.50 = $2,159.48

Check the scale: 184,500 / 80,000 × 936.36 = $2,159.48

On the salary side, $184,500 of wages is the base itself, so the 6.2% Social Security piece still applies to all of it. Medicare at 1.45% has no cap. The flat 7.65% matches Publication 15 on this wage.

On the draw, net earnings are 184,500 × 0.9235 = $170,385.75. That is under $184,500. The Social Security piece of SE tax has not hit the cap yet. A profit equal to the wage base is not the profit that maxes out Social Security, because Topic 554 taxes 92.35% of the profit.

92.35% of profit reaches $184,500 when profit is 184,500 / 0.9235, about $199,783. Example 7 starts above that line.

Example 7: $250,000, over the wage base

Amount $250,000. Leave the boxes at 7.65% and 15.3%.

The page returns:

SE tax $35,323.88

Draw left $214,676.13

Salary take-home $230,875

Employer FICA $19,125

Combined FICA $38,250

Same-pocket salary leftover: 250,000 - 38,250 = $211,750

Those boxes overstate the Social Security piece. The wage base is still $184,500. Here is the same amount with that cap applied by hand, which the page will not do unless you lower the rates yourself.

Draw. Net earnings: 250,000 × 0.9235 = $230,875

Social Security: 184,500 × 12.4% = $22,878

Medicare: 230,875 × 2.9% = $6,695.375, which is $6,695.38 to the cent

SE tax: 22,878 + 6,695.38 = $29,573.38

Draw left: 250,000 - 29,573.38 = $220,426.62

The page’s SE tax is higher by 35,323.88 - 29,573.38 = $5,750.50

Net earnings above the base: 230,875 - 184,500 = $46,375

46,375 × 12.4% = $5,750.50

That is the extra Social Security the flat 15.3% charges on this draw.

Salary, by hand. Employee Social Security: 184,500 × 6.2% = $11,439

Employee Medicare: 250,000 × 1.45% = $3,625

Employee FICA: $15,064

Salary take-home: 250,000 - 15,064 = $234,936

Employer matches the $15,064

Combined FICA: $30,128

Same-pocket leftover: 250,000 - 30,128 = $219,872

The flat 7.65% combined bill was $38,250. The capped bill is $30,128. The difference is $8,122, which is both sides of 6.2% on the $65,500 of wages above $184,500. 2 × 65,500 × 0.062 = $8,122.

A smaller step past the line, $200,000, shows the same pattern with a thinner slice.

Page, flat rates: SE tax $28,259.10, draw left $171,740.90, salary take-home $184,700, combined FICA $30,600.

Hand, draw: net earnings $184,700. Social Security still $22,878. Medicare 184,700 × 2.9% = $5,356.30. SE tax $28,234.30. Draw left $171,765.70.

The page is high by 28,259.10 - 28,234.30 = $24.80, and $200 of net earnings over the base times 12.4% is $24.80.

Hand, salary: employee FICA $14,339, take-home $185,661, combined FICA $28,678, same-pocket leftover $171,322. The flat combined bill of $30,600 is high by $1,922.

If part of the amount is over the base, lower the rates in the boxes or do this split. Leaving 7.65 and 15.3 in place on $250,000 describes a world with no wage base.

An extra 0.9% Medicare tax can apply above a filing-status threshold. That piece is not in these boxes either.

Example 8: $300, under the $400 line

Amount $300. Same rates.

The page still computes a tax.

SE tax: $42.39

Draw left: $257.61

Salary take-home: $277.05

Employer FICA: $22.95

Combined FICA: $45.90

Net earnings on the draw: 300 × 0.9235 = $277.05. Topic 554 usually starts SE tax at $400 of net earnings. $277.05 is under that line. The calculator does not apply the floor. It multiplies the rates you leave in the boxes. On a $300 amount, read the $42.39 as the formula, then check the $400 rule before you treat it as the bill.

A zero amount stops the page. It asks for an amount, because both paths start from the money taken out.

Example 9: employee FICA typed as zero

Amount $80,000. Employee FICA 0%. Employer FICA still 7.65%. SE rate and base unchanged.

The draw does not use the employee rate, so it is unchanged. SE tax $11,303.64. Draw left $68,696.36.

Salary take-home becomes the full $80,000, because 0% of it was subtracted.

Employer FICA is still $6,120.

Combined FICA prints $6,120, which is only the employer half. The employee half is missing because the box says 0.

The paycheck now looks equal to the amount. The business still shows $6,120 if the employer box stays at 7.65%. Comparing that $80,000 paycheck with the $68,696.36 draw skips the employer half on purpose. Put 7.65 back in the employee box when you want Example 1.

The results side by side

Same-pocket salary on the $6,667 row is 6,667 - 1,020.05 = $5,646.95. On the $300 row it is 300 - 45.90 = $254.10. On the zero-employee row it is 80,000 - 6,120 = $73,880, because the employee half was never subtracted. The hand-cap rows are not the page’s output. The flat rows are.

Open the owner draw versus salary calculator with the amount you would take out, and with 7.65, 7.65, 15.3, and 92.35 unless your year uses other rates. If the amount is over $184,500 for 2026, do the wage-base split from Example 7 before you treat the flat result as the bill. The paycheck after an income-tax rate you type is the take-home pay post.