Commission Pay Calculator
Work out commission pay on a flat, tiered, base-plus, gross-margin, or draw plan, with effective rate, quota attainment, supplemental withholding, and net pay.
Commission Pay Calculator
Commission plan
A flat rate pays the same percentage on every dollar of sales.
Booked revenue for the period, before any split. For gross-margin plans enter revenue here and cost below.
Commission is paid on revenue minus this cost.
The plan headline rate. The effective rate you actually earn appears in the results.
Salary or hourly earnings paid for the same period. Leave at 0 for commission-only plans.
Gate: no commission at all until sales reach quota, then commission on everything. Excess only: commission on the sales above quota. Accelerator: the base rate up to quota, a higher rate above it.
Sets the annualized view. Commissions are usually paid a period behind the sales that earned them.
Tiers
Marginal is the common reading and works like tax brackets: each band rate applies only to the sales inside that band. Whole amount applies the top band you reach to every dollar. Check your plan document, because the difference is thousands of dollars.
Adjustments: split, draw, fees, cap
For a team, house, or broker split. A 70/30 brokerage split means 70 here.
Recoverable is an advance you pay back out of future commissions. Non-recoverable is yours regardless, a guaranteed floor.
Leave the cap at 0 if your plan does not cap the payout.
Withholding estimate
The flat method is what employers use when the commission is paid as its own check. Paid on the same check as salary, most payroll systems use the aggregate method instead. Compare both in the Bonus Tax Calculator.
Many states set their own flat supplemental rate. Leave at 0 for the nine states with no wage income tax. The 50-state table lives in the Bonus Tax Calculator.
Overtime true-up (employer)
A nondiscretionary commission has to be added into the regular rate for the weeks it was earned, and the employer owes an extra half-time premium on it for every overtime hour in that stretch.
Employer cost
FUTA and SUTA only apply until annual wages pass the wage base, usually consumed early in the year, so a Q4 commission often carries FICA only.
Effective rate is commission divided by total sales, after tiers, gates, splits, fees, and caps.
Tier breakdown
| Band | Sales in band | Rate | Commission |
|---|
Draw reconciliation
Withholding estimate
You keep 70.3% of the payout. Withholding is not the tax you owe; the difference settles on your return. For the flat-versus-aggregate comparison and state supplemental rates, use the Bonus Tax Calculator.
FLSA overtime true-up
Owed on top of the commission for non-exempt employees, unless the FLSA section 7(i) retail exemption applies. The statutory allocation is per workweek; this spreads the commission evenly across the period, which is the DOL default when it cannot be attributed to particular weeks. Detail in the Overtime Pay Calculator.
Employer cost of this commission
The 0.9% additional Medicare tax is employee-only and is not matched here. Full burden stack in the Employer Cost Calculator.
How to calculate commission pay
Commission pay is the commissionable amount times the commission rate. On $100,000 of sales at 5%, that is $5,000. Every other clause in a commission plan is a rule about what counts as commissionable and which rate applies to it.
Commission-only is the plain version: a real-estate agent taking the 3% listing side of a $400,000 sale earns $12,000 before any brokerage split. Base plus commission puts a guaranteed floor underneath, the standard arrangement in car sales, where a $2,500 monthly base and 4% on $60,000 of gross profit pays $4,900 for the month. Gross-margin plans, common in distribution and services, pay on profit instead of revenue, so $100,000 of sales carrying $60,000 of cost pays commission on $40,000. Tiered plans raise the rate as volume climbs, which is how most SaaS quotas work. A draw advances money through long enterprise cycles and then gets reconciled against what you actually earned.
Whichever shape your plan takes, divide the payout by total sales when you are done. That effective rate sits below the headline rate almost every time, once a quota gate, a split, fees, or a cap have each taken their turn, and it is the one figure that compares cleanly between two offers.
Tiered commission: marginal or cliff?
A plan reading "3% up to $50,000, 5% from $50,000 to $100,000, 8% above" can mean two different things, and the gap between them is real money.
The marginal method works like tax brackets. On $120,000 of sales: $50,000 at 3% is $1,500, the next $50,000 at 5% is $2,500, and the last $20,000 at 8% is $1,600, for $5,600 total. The whole-amount or cliff method applies the highest rate you reach to every dollar: $120,000 at 8% is $9,600. Same sales, $4,000 apart.
Marginal is the default reading and what most plan documents mean. Cliff plans exist because that jump at a tier edge changes behavior: a rep sitting at $99,000 has a very strong reason to close one more deal. The wording gives it away. "The applicable rate applies to all sales in the period" is a cliff; "each portion of sales" is marginal. Quota structures then layer on top. A gate pays nothing until target is reached and then pays on everything, an excess-only plan pays only on the dollars above quota, and an accelerator pays the base rate to quota and a higher rate beyond it. Use the Pay Period Converter to move a monthly commission to an annual view.
How commission is taxed, and why the check looks small
The IRS treats commission as a supplemental wage. Paid on its own check, the flat percentage method withholds 22% federal on the first $1,000,000 of supplemental wages in a calendar year and 37% above that. Paid on the same check as salary, most payroll systems use the aggregate method instead, which withholds as though that combined amount were your normal pay every period, and a single big month can push it well past 22%.
FICA comes out either way: 6.2% Social Security on wages up to the 2026 wage base of $184,500, and 1.45% Medicare with no cap, plus 0.9% more on wages above $200,000. Which leads to a quirk worth knowing. A December commission often nets more than the identical commission in January, because the Social Security cap is already met by year end. Your state then takes its own cut, and many states run a flat supplemental rate of their own.
None of this changes the tax bill itself. Withholding is only a payment on account, and the difference settles when you file. For the flat-versus-aggregate comparison and state-by-state supplemental rates, use the Bonus Tax Calculator. For the regular-wage side of a base-plus plan, see the Salary to Paycheck Calculator or, for hourly reps, the Hourly Paycheck Calculator.
Commission, overtime, and what it costs the employer
For a non-exempt employee, a nondiscretionary commission is part of the regular rate under the FLSA. Once it is paid, the employer has to recompute the regular rate for the weeks the commission covers and pay an extra half-time premium on the overtime hours in that stretch. Work an example: a $2,000 commission spread over 200 hours raises the regular rate by $10, so 12 overtime hours in the period owe another $60. Half-time, not time-and-a-half, because the commission dollars already paid straight time for those hours. Outside sales employees are exempt, and the section 7(i) retail exemption applies only when commissions are more than half of earnings and the regular rate is above 1.5 times the minimum wage. Both doors are narrower than employers tend to assume. The Overtime Pay Calculator works the regular rate in detail.
On the cost side, commission is wages, so the whole employer stack attaches: a 7.65% FICA match, FUTA at 0.6% of the first $7,000 of annual wages, SUTA at your assigned rate up to the state wage base, and workers comp as a percentage of payroll. When in the year you pay it changes the number. A $10,000 commission to a rep who passed the FUTA and SUTA bases months ago costs about $10,765; the same commission to a January hire costs more. The Employer Cost Calculator runs the full burden, and the Payroll Gross-Up Calculator handles the case where you promised a rep a specific net amount.
This page tells you what the plan earned. Turning that into an actual paycheck is the other half of the job. The WorkLogs44 Payroll Calculator app takes a commission as a Bonus/Commission additional-income entry on the employee and runs federal, state, and FICA against it alongside regular wages, with YTD wage-base tracking so a late-year commission respects the Social Security cap, plus employer SUTA and FUTA. Running a team? The Multi-Employee Payroll Calculator does the same thing on the web: every rep commission for the period, and the full payroll cost, in one place.
Frequently Asked Questions
Common questions about commission pay calculator
How do you calculate commission pay?
Multiply the commissionable amount by the commission rate: $100,000 in sales at 5% is $5,000. The arithmetic never gets harder than that. What changes plan to plan is what counts as commissionable and which rate applies to it. A gross-margin plan pays on profit, so $100,000 of sales carrying $60,000 of cost pays on $40,000. A quota plan may pay nothing until you hit target, or only on the sales above it. A tiered plan uses a different rate in each band. A split, whether brokerage, team, or house, comes off the top before anything reaches you. Then divide the payout by total sales. That effective rate is what you compare between two offers, and it is almost always lower than the rate printed on the plan sheet.
How is tiered commission calculated?
Two ways, and your plan document decides which. The marginal method works like tax brackets: with 3% up to $50,000, 5% from $50,000 to $100,000, and 8% above, $120,000 of sales earns (50,000 x 3%) + (50,000 x 5%) + (20,000 x 8%) = $5,600. The whole-amount or cliff method applies the top rate you reach to every dollar: $120,000 x 8% = $9,600. Same sales, $4,000 apart. Marginal is far more common, and it is what most calculators assume. Cliff plans still get written, because that jump at the tier edge is exactly what makes a rep chase one more deal. If your plan document does not say which method it uses, ask before the period closes.
How is commission taxed?
Commission is ordinary taxable wages. The IRS just files it under supplemental wages, which changes how it gets withheld rather than what you eventually owe. Paid as a separate check, the flat percentage method takes 22% for federal income tax on the first $1,000,000 of supplemental wages in a calendar year, and 37% on anything above. Paid on the same check as salary, most payroll systems switch to the aggregate method, which withholds as though that combined amount arrived every period all year. Social Security at 6.2% (up to $184,500 of wages in 2026) and Medicare at 1.45% come out either way, plus whatever your state takes. The Bonus Tax Calculator compares both methods across all 50 states.
Why does commission look like it is taxed higher than salary?
Because withholding assumes a steady paycheck, and a commission is anything but steady. The flat 22% supplemental rate can land above your real marginal rate if you sit in the 10% or 12% bracket. The aggregate method overshoots worse: it reads a single $20,000 commission as though $20,000 shows up every month, and withholds accordingly. Add FICA at 7.65% and state withholding, and the check can look like it lost 35% to 40%. What you actually owe still depends on your total annual income, so the excess comes back as a refund. It is a cash-flow problem, not a tax-rate problem.
What is a draw against commission, and how does it work?
A draw is an advance against commissions you have not earned yet, meant to keep income steady through a ramp-up period or a long sales cycle. A recoverable draw comes back out of later commissions. On a $3,000 monthly draw, earning $5,000 in commission means you receive the $3,000 plus $2,000 on top, while earning only $1,000 leaves $2,000 owed and carried into next month as a balance. A non-recoverable draw is yours regardless: a floor, not a loan. Get the type in writing. The difference is whether a slow quarter leaves you owing your employer money.
How do you calculate base salary plus commission?
Add the base for the period to the commission earned in it: a $4,000 monthly base with 4% on $80,000 of sales is $4,000 + $3,200 = $7,200, or $86,400 a year at that pace. Two numbers matter more than the total. Pay mix (here 56% base, 44% variable) tells you how much of your income is guaranteed, and sales roles commonly run 60/40 or 50/50. OTE, or on-target earnings, is base plus the commission you would earn at exactly 100% of quota, and it is the figure recruiters put in the job posting. OTE is not a promise. Only the base is.
Does commission count toward overtime pay?
For a non-exempt employee, yes. Under the FLSA a nondiscretionary commission is part of the regular rate, so once it is paid the employer has to go back over the weeks it was earned, recompute the regular rate with the commission folded in, and pay an extra half-time premium on every overtime hour in that stretch. Half-time rather than time-and-a-half, because the commission dollars already covered straight time for those hours. Outside sales and the section 7(i) retail exemption are real, but both are narrower than most employers assume. See the Overtime Pay Calculator for the regular-rate math.
What does a commission cost the employer beyond the commission itself?
Commission is wages, so employer payroll taxes attach to every dollar: a matching 7.65% FICA (6.2% Social Security up to $184,500 of wages in 2026, plus uncapped 1.45% Medicare), FUTA at 0.6% of the first $7,000 of annual wages, and state unemployment tax at your assigned rate up to your state wage base. Workers comp premium is usually a percentage of payroll too. Timing matters more than people expect. A $10,000 commission to an employee already past the FUTA and SUTA wage bases costs about $10,765; the same commission to a January new hire costs more. And if that employee is non-exempt with overtime in the period, the FLSA true-up lands on top of all of it.