How this calculator works
Commission is sales × your commission rate. With a quota, sales up to the quota earn the base rate and sales above it earn the higher rate.
For tax purposes, commissions are supplemental wages, like bonuses. When they are paid separately from regular salary, most employers withhold federal income tax at a flat 22% (37% above $1 million a year).
Social Security (6.2%) applies until your total wages for the year reach $184,500, and Medicare is 1.45%, plus 0.9% above $200,000.
Withholding is a prepayment, not your final tax. The calculator compares the 22% withheld with the tax the commission really adds, based on your base salary, so you can see whether to expect a refund or a bill.
Worked example
$50,000 of sales at 5%, $45,000 base salary
- Commission: $50,000 × 5% = $2,500.
- Withholding: $550 federal (22%), $155 Social Security and $36.25 Medicare. Take-home: $1,758.75.
- On a $45,000 salary the commission falls in the 12% bracket, so it really adds $300 of federal tax. About $250 comes back at tax time.
- With a $100,000 quota and 8% above it, $120,000 of sales earns $5,000 + $1,600 = $6,600.
Questions people ask
Are commissions taxed higher than salary?
No. They are taxed as ordinary income at the same rates. They are often withheld at a flat 22%, which can be more or less than your actual rate.
What is a typical commission rate?
It varies widely by industry: real estate agents often split around 5% to 6% of a home’s price between agents, while retail and software sales roles range from a few percent to over 10%.
What is a commission draw?
A draw is an advance against future commissions. Your commissions later repay it; depending on your contract, a shortfall may or may not have to be paid back.
Do I pay Social Security on commission?
Yes, until your total wages for the year reach the Social Security wage base, $184,500 in 2026. Medicare applies to all of it.
Sources
Last reviewed October 2, 2026