The IRS tabulates S corporation tax returns by size of business receipts. In tax year 2022, returns with $1 million to under $2.5 million in receipts reported aggregate net income equal to 9.03% of their receipts, against 6.92% for returns with $10 million to under $50 million, a difference of 2.11 points. Across the bands shown, aggregate cost-of-goods shares were generally lower and aggregate officer-compensation shares generally higher in smaller receipts bands, and the $1 million to under $2.5 million band’s net income share was higher than the $10 million to under $50 million band’s in every year from 2014 to 2022. These are aggregate shares of tax-return dollars, not the margin of a typical company.
The IRS Statistics of Income (SOI) division publishes detailed tabulations of corporate tax returns each year. This article uses Table 3.2 of the Corporation Complete Report, titled by the IRS “Returns of Active Corporations, Form 1120S, Total Receipts and Deductions, Portfolio Income, Rental Income, and Total Net Income,” which groups S corporation returns by size of business receipts. The unit is the tax return. The figures are estimates from a sample of returns: as the IRS explains in its documentation of the corporate sample (tax year 2015 edition), the estimates “are based on a sample, they may differ from population aggregates resulting from a complete census of all corporate income tax returns.”
How to read these numbers
Except for return counts and differences in points, every percentage below is an aggregate share: the total dollars of one line, summed across all returns in a size band, divided by the total business receipts of the same returns. Larger returns contribute more dollars, so each share is weighted toward the bigger returns in the band. It is not the margin of a typical or median company, and deficits are netted into the IRS line for net income less deficit. The measure is tax-return income, which follows tax rules rather than the financial statements a company prepares for its owners or lenders.
The registered comparison
Net income (less deficit) from a trade or business, as a share of business receipts, tax year 2022:
| Size of business receipts | Returns | Net income as a share of receipts |
|---|---|---|
| $1,000,000 under $2,500,000 | 627,774 | 9.03% |
| $10,000,000 under $50,000,000 | 116,110 | 6.92% |
| Difference | 2.11 points |
The IRS does not publish coefficients of variation for these size tables, so no interval is shown and no significance is claimed.
Selected lines as a share of receipts, by size band
Each line as a percentage of business receipts, aggregate across all returns in the band, tax year 2022:
| Receipts band | Returns | Cost of goods sold | Officer compensation | Salaries and wages | Employee benefit programs | Rents | Advertising | Net income | Selected compensation and benefits | Officer compensation plus net income |
|---|---|---|---|---|---|---|---|---|---|---|
| $25,000 under $100,000 | 766,556 | 13.55 | 14.74 | 6.55 | 0.65 | 7.18 | 1.61 | 7.38 | 21.94 | 22.12 |
| $100,000 under $250,000 | 908,665 | 14.81 | 15.88 | 7.85 | 0.65 | 5.16 | 1.22 | 17.75 | 24.38 | 33.63 |
| $250,000 under $500,000 | 709,039 | 22.79 | 12.87 | 12.38 | 0.56 | 5.23 | 1.26 | 13.29 | 25.81 | 26.16 |
| $500,000 under $1,000,000 | 656,675 | 29.20 | 9.49 | 16.15 | 0.65 | 4.91 | 1.10 | 10.20 | 26.29 | 19.69 |
| $1,000,000 under $2,500,000 | 627,774 | 36.38 | 7.05 | 17.07 | 0.84 | 4.03 | 1.09 | 9.03 | 24.96 | 16.08 |
| $2,500,000 under $5,000,000 | 249,525 | 45.62 | 4.61 | 15.77 | 0.96 | 3.17 | 0.90 | 8.64 | 21.34 | 13.25 |
| $5,000,000 under $10,000,000 | 143,385 | 52.76 | 3.39 | 13.73 | 0.97 | 3.02 | 0.83 | 7.50 | 18.09 | 10.89 |
| $10,000,000 under $50,000,000 | 116,110 | 63.26 | 2.42 | 10.88 | 1.06 | 2.15 | 0.78 | 6.92 | 14.36 | 9.34 |
| $50,000,000 under $250,000,000 | 22,589 | 72.55 | 1.13 | 8.54 | 0.94 | 1.45 | 0.66 | 6.39 | 10.61 | 7.52 |
| $250,000,000 or more | 3,041 | 76.78 | 0.56 | 7.34 | 0.77 | 1.03 | 0.58 | 5.60 | 8.67 | 6.16 |
Source: Internal Revenue Service, Statistics of Income, Corporation Complete Report, Table 3.2, tax year 2022 (file 22co32ccr.xlsx), downloaded October 3, 2026. Selected compensation and benefits is officer compensation plus salaries and wages plus employee benefit programs. It is not a measure of every labor-related cost. Net income is the line for net income less deficit from a trade or business. The band under $25,000 is excluded, because with very small receipts any ratio to receipts is unstable. The lines shown are the seven the study’s protocol lists, plus two sums. They are not every line on the return and do not add up to 100. Protocol Amendment 2 records that clarification.
Three patterns run through the table. Cost of goods sold rises steadily with size, from 13.55% in the smallest band shown to 76.78% in the largest. Officer compensation peaks at 15.88% in the $100,000 to under $250,000 band and falls to 0.56% at $250 million or more. Net income as a share of receipts is highest at $100,000 to $250,000 (17.75%) and falls in every larger band after that. Because the table mixes industries, it cannot show how much of the cost-of-goods pattern reflects industry mix rather than receipts size.
Officer compensation and net income should be read together
The IRS line is compensation of officers. Some officers are also shareholders, but the table does not say how much of this compensation went to shareholder-employees. Where an officer is also a shareholder-employee, tax rules affect how payments are split between salary and distributions. The IRS states that “S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee.” Because salary decisions can move dollars between the two lines, the last column of the table adds them together. On that combined measure, the $1 million to under $2.5 million band reported 16.08% of receipts, against 9.34% for $10 million to under $50 million.
The same comparison, 2014 to 2022
Net income as a share of business receipts for the two registered bands, each year’s tabulation:
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| Tax year | $1M under $2.5M | $10M under $50M | Difference (points) |
|---|---|---|---|
| 2014 | 7.84% | 5.32% | 2.52 |
| 2015 | 8.48% | 5.67% | 2.81 |
| 2016 | 8.58% | 5.74% | 2.84 |
| 2017 | 8.36% | 5.43% | 2.93 |
| 2018 | 8.45% | 5.34% | 3.11 |
| 2019 | 8.71% | 5.55% | 3.16 |
| 2020 | 7.87% | 6.56% | 1.31 |
| 2021 | 9.87% | 7.90% | 1.97 |
| 2022 | 9.03% | 6.92% | 2.11 |
The bands are in nominal dollars and were not adjusted for inflation, so a company can move between bands without changing in real size. Each year is a separate set of returns, not the same companies followed over time. The band definitions were checked to be the same in every year shown. The smaller band’s share was the higher of the two in all nine years.
What the numbers mean for an owner
These are descriptive aggregates for the stated federal-data population. They do not identify causal effects, diagnose an individual company, or estimate the result of adopting a practice. The guidance that follows is operating judgment, not a finding from the data.
The table compares different groups of returns at one point in time. It does not follow companies as they grow. In the aggregate, cost-of-goods shares rise across the bands shown, officer-compensation shares fall after the $100,000 to under $250,000 band, and net income as a share of receipts peaks in that band and falls in every larger one. Officer compensation plus net income falls from about a third of receipts at $100,000 to $250,000 to under a tenth at $10 million to under $50 million.
As operating judgment, the shape of the table matches what owners often experience as they grow: purchasing, staffing and management take a larger role, and the owner’s own work accounts for less of the result. The table does not show that any one company will follow that path, and industry differences are large. It is a reason to plan for the change deliberately rather than to assume the old ratios will hold.
How to handle it: build your own common-size statement and compare it fairly
The steps below are an operating recommendation. This study did not test them, and the IRS does not endorse them.
1. Put your own numbers in the same format. Express each line of the income statement as a percentage of revenue: cost of goods, officer pay, other salaries, benefits, rent, advertising and net income. Do it for at least three years so a single unusual year does not mislead.
2. Add officer pay and net income before comparing. In an S corporation where the owner is also an officer, how the owner is paid shifts dollars between those lines. Comparing the sum avoids reading a salary decision as a change in performance. The salary itself should reflect reasonable compensation for the work, which is a question for the company’s tax adviser.
3. Compare with your industry first, size second. These IRS figures mix all industries. A distributor and a consulting firm of the same size will look nothing alike. Use industry benchmarks for the main comparison and this table to understand how the shape changes with size.
4. Watch the cost-of-goods and labor lines as you grow. As receipts grow, purchasing and staffing become the main levers. Review gross margin and labor cost as a share of revenue every month, and set a target for each before the next stage of growth, not after.
5. Decide what net income is for. Retained profit funds growth, reserves and debt service. An owner who knows how much the business needs to keep, and for what, can set distributions and salary with the company’s tax adviser without starving the business.
What this data does not tell you
- These are aggregate-dollar shares weighted toward larger returns, not the margin of a typical company in the band.
- It mixes all industries, so it cannot separate industry mix from receipts size.
- It reflects tax-return accounting, not financial statements prepared for lenders or buyers.
- Officer compensation and net income are shaped by tax rules and owner choices.
- The IRS publishes no sampling error for these size tables, so small differences between bands or years may not be meaningful.
Method
Already published by the agency: the IRS publishes these dollar amounts and return counts by size of business receipts in Table 3.2 each year. New here: the lines shown converted to shares of business receipts for each band from $25,000 upward, selected compensation and benefits, defined as officer compensation plus salaries and wages plus employee benefit programs, and officer compensation plus net income, and the registered comparison for 2014 to 2022.
Source. Internal Revenue Service, Statistics of Income, Corporation Complete Report, Table 3.2 (Form 1120-S by size of business receipts), tax years 2014 to 2022, downloaded October 3, 2026.
Calculation. Within each band, each line’s aggregate amount is divided by the band’s aggregate business receipts and multiplied by 100. Net income is the line for net income less deficit from a trade or business. The band definitions were compared across years before the series was built. Cells not published would be treated as missing, never as zero.
Protocol. The measure, the two bands and the years were fixed in a dated protocol before any ratio was computed. The protocol (wave 2 section, frozen October 4, 2026) and its dated amendments are at https://kamyarshah.com/public-data-protocol/
Check. All figures, including the return counts for each band, were recomputed from the raw files by a separately written program, built without access to this study’s results.
The agencies did not review or endorse this analysis. Kamyar Shah sells fractional COO and CMO services.
Questions about this analysis can be sent through https://kamyarshah.com/contact/.
