[hsitz]

No, the non-salary income is not "qualified dividends" and does not qualify for the 15% rate. It is taxed as "ordinary income", just like the salary. The advantage of S-Corp taxes has nothing to do with lower tax rates. It has to do with fact that FICA and Medicare taxes are taken out only from the portion of income designated as "salary". So you effectively save about 15% (i.e., the rate of FICA/Medicare withholding) for income that is above your salary to point where FICA/Medicare is phased out (around $100k).

Also others are correct in saying that an LLC can elect to be taxed as an S-Corp. S-Corp is a concept in the tax code, not a form of ownership itself. That is, if you create a corporation with the state, that corporation is just a "corporation", not an S-Corp or a C-Corp. Your corporation will be classified as an S-Corp or C-Corp depending on how you elect to file taxes with the IRS. It's similar with an LLC, which you create with the state, then can elect what tax treatment you will use with IRS: typically as sole proprietorship, partnership, or S-Corp.