Commission Tax Calculator
Enter your commission check and how you're paid — this estimates withholding (W-2) or the tax you should set aside (1099).
Estimate your take-home
Estimates only — not tax advice. W-2 mode shows typical withholding (you settle the true amount at filing). 1099 mode shows what to set aside; deductible business expenses reduce it.
How commission is taxed for W-2 employees
Commission is supplemental wages. When it's paid separately from (or identified separately within) your regular paycheck, employers typically withhold a flat 22% federal (37% on supplemental wages above $1M in a year), plus 6.2% Social Security (up to the annual wage cap) and 1.45% Medicare, plus your state's income tax.
Two things reps routinely get wrong:
- 22% is a withholding rate, not your tax rate. If your real marginal rate is 12%, you'll get the difference back at filing; if it's 32%, you'll owe. Big commission months don't get "taxed extra" — they just get withheld at the flat rate.
- The aggregate method exists too. If commission is lumped into a regular paycheck without being identified separately, payroll may withhold as if you earn that much every period — which over-withholds badly in a spike month. It self-corrects at filing, but it's why some checks look brutal.
How commission is taxed for 1099 reps
Nothing is withheld — you owe self-employment tax of 15.3% on 92.35% of net earnings (both halves of Social Security and Medicare), plus ordinary income tax at your bracket, minus a deduction for half the SE tax. You're expected to pay quarterly estimates (April, June, September, January); underpaying triggers penalties. The working rule of thumb: set aside 25–35% of every commission check, more in high-tax states. Business expenses — mileage, phone, leads, home office — reduce the taxable amount, so track them.
Plan on net, not gross
The practical takeaway from all of this: budget on the after-tax number from the day you close the deal. The Controlla app can apply your tax percentage to each sale it tracks, so the earnings you see are the earnings you keep — see also gross vs net commission for the deductions that come before tax.
Frequently asked questions
Why is commission taxed at 22%?
It isn't, exactly — 22% is the flat federal withholding rate for supplemental wages under $1M. Your actual tax is your normal income tax rate, settled when you file; the difference comes back as a refund or a balance due.
How much should 1099 salespeople set aside for taxes?
A common rule is 25–35% of each check: 15.3% self-employment tax on ~92% of net earnings, plus income tax at your bracket, minus deductions. High earners and high-tax states should lean higher.
Is commission taxed more than salary?
No. Commission is ordinary income taxed at the same rates as salary. Only the withholding method differs, which can make individual checks look more heavily taxed than they ultimately are.
Do I pay quarterly taxes on commission income?
W-2 employees don't (withholding covers it). 1099 reps must pay quarterly estimated taxes in April, June, September, and January or face underpayment penalties.