S-corp Tax Savings for Chiropractor in TX
How to set reasonable S-corp compensation for a Chiropractor in Texas. Planning framework, checklist, and official sources.
Updated: 2026-01-15
Running an S corporation can lower self-employment taxes by splitting pay into W-2 salary and distributions, but the IRS expects that salary to be reasonable for the work performed. This guide gives a practical, planning-first framework for a Chiropractor in Texas, plus the official sources your CPA will want to see.
Last reviewed: January 15, 2026.
Key takeaways
- The IRS expects shareholder-employees to take reasonable wages before distributions.
- Reasonable compensation is fact-specific: role, hours, revenue drivers, and comparable market pay matter.
State tax snapshot
- Texas franchise tax rates are 0.375% (retail/wholesale) or 0.75% (other). (https://comptroller.texas.gov/taxes/franchise/index.php/forms/)
- The no-tax-due threshold is $2,650,000 for report years 2026–2027; the EZ computation total revenue threshold is $20 million. (https://comptroller.texas.gov/taxes/franchise/index.php/forms/)
Role & revenue drivers
Chiropractors split time between patient care, treatment planning, and clinic operations. Revenue drivers typically include patient volume, payer mix, and treatment complexity.
State + profession context
Chiropractor owners are typically hands-on clinicians, so revenue tracks patient volume, care plans, and retention. Many also cover scheduling, compliance documentation, and staff oversight. Texas has no personal income tax, but the franchise tax still applies at the entity level with clear thresholds and rates. Fast-growth metro markets often increase competition for staff and make owner oversight more hands-on. Use the OEWS wage range as an anchor, then sanity-check it against local hiring realities and your exact responsibilities. The goal isn’t a perfect number; it’s a defensible narrative your CPA can validate with your file. Documenting time allocation and responsibilities is often the deciding factor in a defensible range.
Compensation benchmark (SOC)
- SOC code: 29-1011 (Chiropractors).
- BLS OEWS (May 2024 release) annual median wage in Texas: $87,130; 25th–75th percentile range: $58,070–$125,360. (https://data.bls.gov/oes/)
Note: OEWS May 2024 was released on April 2, 2025 (latest available as of January 15, 2026). (https://www.bls.gov/oes/update.htm)
What "reasonable compensation" means
Reasonable compensation is the wage you would pay someone else to do your job under similar conditions. The IRS looks at duties, experience, time spent, and what comparable roles earn, not a fixed percentage of profit. Use multiple data points to defend a range, not a single number.
A clean framework
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Define the role. Capture what you actually do: client/patient load, revenue responsibility, admin oversight, and business development.
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Benchmark a range. Use BLS occupational wage data plus any industry surveys or local comps your CPA trusts. Focus on state-level data where possible.
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Model the split. Pay the reasonable wage as W-2 salary; treat the remaining profit as distributions only after the wage is defensible.
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Document the rationale. Keep your notes, sources, and calculations with the tax file so your CPA can defend the position.
Example scenario
Example: A Texas chiropractor who spends most hours on patient care but also manages staff can justify a wage that reflects both clinical and operating duties. Use local wage data and written time allocation to support the split.
Decision checklist
- Did income or services change materially this year?
- Do you have a defensible compensation range for a Chiropractor in Texas?
- Is the documentation clear enough to share with your CPA?
- Have you documented how time is split across delivery, management, and growth?
Questions to ask your CPA
- What compensation range is defensible for my role and hours?
- How do Texas-specific entity taxes affect the split?
- What documentation would you want if the IRS asked for support?
FAQ
Do I need a separate state S election in Texas? Many states require additional registration or elections beyond the federal S election. Confirm the Texas requirements with your CPA and the state tax authority.
Should I use national or Texas wage data? State or local data is typically more defensible when available. Use BLS data and any reputable industry surveys your CPA prefers.
What documents should I keep? Time allocation notes, comparable wage sources, and written rationale for the salary range are the most common requests.
Related resources
- S-corp Reasonable Compensation Guide
- Year-End Tax Projection
- Estimated Tax Catch-Up
- Tax Optimization
Next step
Use the S-corp Reasonable Compensation Guide to draft your range, then bring it to your CPA for validation.
Compliance note
This guide is for planning and coordination only. It does not provide tax or legal advice. Confirm details with a qualified professional.
