Use this free commission calculator to see how much you earn on a sale. Enter your sales and commission rate, add tiered rates if your pay plan has them, or switch to real estate mode to split a home sale commission between agents and brokers. You’ll see your commission, total pay, and effective rate right away.
Each rate applies only to the sales inside its tier, like tax brackets.
Enter 0 if you’re paid commission only.
Commissions are negotiable. Enter 0 for the buyer’s agent if the buyer pays their own agent.
Your commission
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Commission at different sales levels
Figures are before taxes. Your pay plan may include draws, caps, clawbacks, or fees not shown here. Real estate commissions are negotiable and not set by law. Estimates for educational use, not financial advice.
How to Use This Commission Calculator
- Pick your commission type. Choose Sales commission for one flat rate, Tiered if your rate goes up as you sell more, or Real estate for a home sale.
- Enter your total sales. Use the sales for the same period your commission is paid on, such as a month or a quarter.
- Enter your rate or tiers. For tiered plans, enter where each tier ends and the rate for that tier.
- Add your base pay. Enter the base salary for the same period, or 0 if you’re paid commission only.
- Read the chart. It shows your total pay at half, three-quarters, one-and-a-quarter, one-and-a-half, and two times your current sales, so you can see what a bigger month is worth.
How Commission Is Calculated
A straight commission is a percentage of the sale. Multiply the sale amount by the rate, written as a decimal.
Commission = Sales × Commission rate Total pay = Base pay + Commission Effective rate = Commission ÷ Sales
Example: You sell $50,000 this month at an 8% commission rate. Your commission is $50,000 × 0.08 = $4,000. With a $3,000 monthly base salary, your total pay is $7,000.
| Monthly sales | 5% rate | 8% rate | 10% rate |
|---|---|---|---|
| $25,000 | $1,250 | $2,000 | $2,500 |
| $50,000 | $2,500 | $4,000 | $5,000 |
| $100,000 | $5,000 | $8,000 | $10,000 |
| $250,000 | $12,500 | $20,000 | $25,000 |
How Much Do You Need to Sell?
To work backward from an income goal, divide the commission you want by your rate.
Sales needed = Commission goal ÷ Commission rate
If you want $5,000 in commission at an 8% rate, you need $5,000 ÷ 0.08 = $62,500 in sales. If you have a base salary, subtract it from your income goal first.
Tiered Commission: How Each Tier Works
Many sales plans pay a higher rate as you sell more. In the most common setup, each rate applies only to the sales inside its tier, the same way federal tax brackets work. Selling into a higher tier never lowers the commission you already earned.
Example: Your plan pays 5% on the first $50,000, 8% on sales from $50,000 to $100,000, and 10% on everything above $100,000. You sell $120,000.
| Tier | Sales in tier | Rate | Commission |
|---|---|---|---|
| First $50,000 | $50,000 | 5% | $2,500 |
| $50,000 to $100,000 | $50,000 | 8% | $4,000 |
| Above $100,000 | $20,000 | 10% | $2,000 |
| Total | $120,000 | 7.08% effective | $8,500 |
Some plans work differently. A retroactive or “back to dollar one” plan pays the top rate you reach on all of your sales, so the same $120,000 would earn $12,000 at 10%. Check your written compensation plan to see which method your employer uses. This calculator uses the tier-by-tier method.
Common Types of Commission Pay
- Straight commission. All pay comes from commission. Income can be high in strong months and very low in slow ones.
- Base salary plus commission. A fixed salary covers the basics, and commission rewards sales on top. The commission rate is usually lower than in commission-only roles.
- Tiered commission. The rate rises as you hit higher sales levels, which rewards top performers.
- Gross margin commission. You’re paid a percentage of the profit on a sale, not the sale price. On a $10,000 sale that cost the company $6,000, a 20% margin commission pays 20% of $4,000, or $800. To use this calculator for it, enter the gross profit as your sales.
- Draw against commission. Your employer pays an advance (the draw) each pay period, then subtracts it from the commission you earn. If you draw $2,000 and earn $3,500 in commission, you receive another $1,500. If you earn less than the draw, a recoverable draw may be taken out of future commission, while a non-recoverable draw usually isn’t.
Real Estate Commission: Who Gets What
When a home sells, the commission is a percentage of the sale price. It’s usually split between the listing side and the buyer’s side, and each agent then shares their side with their brokerage.
Commissions are negotiable. According to the National Association of REALTORS®, broker compensation “is not set by law and is fully negotiable.” Under practice changes that took effect on August 17, 2024, offers of compensation to buyer’s agents are no longer allowed on the MLS, and buyers working with a REALTOR® must sign a written agreement with their agent before touring a home. Who pays the buyer’s agent, and how much, is now negotiated in each deal.
Example: A home sells for $400,000. The seller agrees to pay 2.5% to the listing agent and 2.5% to the buyer’s agent, for $20,000 total. Each side gets $10,000. If the listing agent keeps 70% under the brokerage split, the agent earns $7,000 before expenses and the broker keeps $3,000. The seller has $380,000 left before other closing costs and the mortgage payoff.
| Sale price | Total at 5% | Each side at 2.5% | Agent’s 70% of one side |
|---|---|---|---|
| $300,000 | $15,000 | $7,500 | $5,250 |
| $400,000 | $20,000 | $10,000 | $7,000 |
| $600,000 | $30,000 | $15,000 | $10,500 |
Agents also usually pay their own business costs, such as licensing, association dues, marketing, and brokerage fees, so take-home pay is lower than the split amount.
How Commission Is Taxed
For employees, commissions are wages, just like salary. They’re subject to federal income tax, Social Security, and Medicare, plus state income tax where it applies. When commissions are paid separately from your regular paycheck, employers often withhold federal income tax at the flat supplemental wage rate of 22%, or 37% on supplemental wages above $1 million in a calendar year, according to IRS Publication 15.
On a $4,000 commission check paid separately, that’s $880 of federal income tax withholding, plus $306 for Social Security (6.2%) and Medicare (1.45%). Withholding isn’t your final tax. Your actual tax is settled when you file your return, so you could owe more or get some back.
If you’re an independent contractor, such as many real estate agents, no tax is withheld. You generally pay self-employment tax and make estimated tax payments yourself.
Commission and Overtime Pay
Earning commission doesn’t automatically mean you aren’t owed overtime. Under the federal Fair Labor Standards Act, commissioned employees of retail or service businesses are exempt from overtime only when all three of these are true, according to the U.S. Department of Labor:
- They work for a retail or service establishment.
- Their regular rate of pay is more than one and a half times the minimum wage for every hour worked in a week with overtime hours.
- More than half of their total earnings in a representative period come from commissions.
Outside sales employees are covered by a separate exemption. If you’re paid overtime, commissions are generally included when your regular rate is figured, which raises your overtime rate. Our overtime calculator can help with the hourly side.
Frequently Asked Questions
How do you calculate a commission percentage?
Divide the commission by the sale amount and multiply by 100. A $1,200 commission on a $15,000 sale is $1,200 ÷ $15,000 = 0.08, or 8%.
What is a typical sales commission rate?
There’s no standard rate. It depends on the industry, the product’s price and margin, and whether you also get a base salary. Commission-only roles tend to pay higher rates than roles with a base salary. Your written compensation plan is the only reliable source for your rate.
Is commission calculated before or after taxes?
Before. Commission is figured on your sales, and taxes are then withheld from the commission like any other wages. The amounts this calculator shows are gross pay before taxes.
What is an effective commission rate?
It’s your total commission divided by your total sales. With tiered plans, it shows the average rate you actually earned. In the tiered example above, $8,500 on $120,000 in sales is an effective rate of 7.08%.
Who pays the real estate commission?
It’s negotiated. Sellers often pay the listing agent from the sale proceeds and may agree to pay some or all of the buyer’s agent fee, but buyers may also pay their own agent under their written buyer agreement. Ask about fees before you sign any agreement.
Can my employer take back a commission?
Some plans include clawbacks, such as when a customer returns a product or cancels a contract. Whether and how that’s allowed depends on your written plan and your state’s wage laws. Read your compensation agreement carefully.
More free calculators
Sources
- National Association of REALTORS®: NAR Settlement FAQs
- IRS Publication 15 (Circular E), Employer’s Tax Guide
- U.S. Department of Labor: Fact Sheet #20, Employees Paid Commissions by Retail Establishments
- IRS: Self-Employment Tax (Social Security and Medicare Taxes)
This calculator provides estimates for educational purposes only and is not legal, tax, or financial advice. Your written compensation plan, contract, and state law determine your actual pay. Last updated: October 12, 2026.