💼 Commission Calculator

Basic commission = Sale Amount × Commission Rate ÷ 100. For example, a 5% commission on a $200,000 home sale = $10,000. For tiered (bracket) structures, each tier's rate applies only to the revenue within that bracket — similar to how income tax brackets work.

W-2 employees receive commission as part of their paycheck with taxes withheld by the employer. 1099 independent contractors receive gross commission without any withholding — they must pay self-employment tax (15.3% in the US) and quarterly estimated taxes. 1099 agents often earn higher gross rates to compensate for the additional tax burden and lack of benefits.

A tiered structure applies different commission rates to different sales thresholds — like income tax brackets. Only the amount within each tier is multiplied by that tier's rate. This incentivises reps to push past each threshold. For example: 3% on the first $25K, 5% on $25K–$50K, 8% above $50K.

In real estate, the total commission (typically 5–6% of sale price) is split: first between buyer's and seller's agents, then each agent further splits with their brokerage. A common split is 60/40 agent/broker, though top producers may negotiate 90/10 or even 100% splits with a desk fee.

Yes — commission income is fully taxable, whether you are a W-2 employee or a 1099 contractor. For W-2 earners, commission may be withheld at a flat 22% supplemental rate federally. For 1099 earners, you pay both income tax and self-employment tax. You may be able to deduct business expenses (home office, vehicle, marketing) to reduce taxable commission income.