Quick scene: a CRNA texts me after a big year.
“Ben, our profits jumped. Do I have to raise my W-2 salary now?”
I get why people ask. In CRNA circles, “reasonable salary” gets treated like it is on a sliding scale tied to profits.
But here’s the part that matters most.
Reasonable compensation is tied to the work you do, not the profit your business makes.
If your role, hours, and responsibilities did not change, your salary can absolutely stay the same year after year, even when distributions increase.
The idea that keeps tripping people up
The logic goes like this:
“If the business earns more, the salary must rise too.”
That feels reasonable… until you remember what the IRS is actually looking for. They are not asking, “Did the business have a great year?”
They are asking, “Did you pay yourself a reasonable wage for the services you provided?”
Profit is what is left over after the business pays its expenses, including payroll. Profit is not the payroll calculator.
Quick takeaway
- If your work stayed the same, your W-2 can stay the same.
- If your work changed, your W-2 should probably change too.
- The goal is not a magic number. The goal is a story you can defend.
Common misconceptions about reasonable salary
- “Higher profits automatically require higher W-2 wages.”
Profits can grow without changing the job. Better contracts, more efficient scheduling, fewer dead days, better collections, lower overhead. None of that automatically changes what your labor is worth. - “The Social Security wage base determines reasonable salary.”
The wage base affects payroll tax math. It does not define what your role is worth. - “There is a ‘safe’ number everyone should use.”
There isn’t. Reasonable compensation is a facts-and-circumstances analysis. It depends on your duties, hours, and responsibilities, plus what similar work pays in your market.
Reasonable compensation is about the job
Here’s the simplest way to think about this:
Salary answers: “What is the work worth?”
Distributions answer: “What did the business earn after paying for the work?”
It is very normal for CRNAs with stable clinical roles to have steady W-2 wages while distributions rise over time. The job did not change. The economics around it did.
And when salaries rise and fall purely based on profitability, compensation starts to look like profit reclassification instead of pay for services.
That is not the look we are going for.
Where the Social Security wage base fits in
The Social Security wage base matters for S-Corp planning, but it should not drive your salary decision.
For 2026, the Social Security wage base is $184,500.
What the wage base actually tells you is this:
- Once your wages are at or above the wage base, the S-Corp benefit tends to flatten from a Social Security tax perspective.
- From that point on, the S-Corp can still make sense, but the “why” shifts more toward Medicare tax dynamics, planning flexibility, and retirement strategy options.
What it does not mean is: “Raise wages to chase the cap.”
If the underlying role did not change, the reasonable salary does not need to either.
When a salary increase actually makes sense
Now for the part people skip.
If your work changed, and especially if it changed in a measurable way, a raise can be absolutely appropriate.
Examples that often justify a higher W-2:
- More clinical hours (more shifts, more cases, fewer weeks off)
- More call (or more frequent high acuity call)
- New responsibilities (lead, chief, education, compliance, scheduling, admin time)
- Supervision duties or expanded scope beyond pure clinical work
- Adding locations or expanding services where you are doing more than “just show up and do cases”
In other words, when the job becomes a bigger job, pay it like a bigger job.
Make it defensible: a simple documentation checklist
I have a rule of thumb: the IRS does not accept vibes as documentation.
If you want your salary decision to hold up under scrutiny, keep a simple file (digital is fine) with:
- Your role summary: typical weekly hours, call expectations, admin duties, supervision, etc.
- Support for comparable pay: market comp info, recruiter ranges, job postings, surveys, or other credible benchmarks
- Payroll records: what you paid yourself and when
- Notes on year-to-year changes: “No meaningful role changes in 2026” or “Added 1 call shift weekly starting March”
Is this thrilling? No.
Is it effective? Yes. Documentation beats panic every day of the week.
The story you want to be able to tell
When compensation is done right, you can explain it in plain English:
- This is the work I performed.
- This is what similar work pays in my market.
- This is the salary I paid for those services.
- This is how I applied the approach consistently year after year.
That narrative is far stronger than chasing any single number.
FAQ
Can my salary stay the same if profits rise?
Yes, if your services did not materially change. Profit growth alone is not a reason to increase W-2 wages.
Does the wage base determine reasonable salary?
No. The wage base affects payroll tax math. Reasonable compensation is determined by duties, time, responsibilities, and market pay for similar work.
What is the biggest mistake you see?
Wages that spike only in high-profit years, then drop when profits drop. That pattern can look like you are reverse-engineering payroll to hit a tax outcome.
The takeaway
Reasonable salary is not about precision. It is about discipline.
If the work has not changed, the pay does not need to either.
If profits grow, that is a good problem to have. It does not automatically change the job.
Set compensation thoughtfully. Apply it consistently. Document the logic.
That is not aggressive planning. That is just good planning.
Important note: This is general educational information. Talk with your CPA or tax advisor about your specific situation before making changes.