Commission Calculator

Multiply the sales amount by the commission rate. $50,000 at 5% is $2,500.

Each band of sales is paid at its own rate. Sales up to the threshold earn the first rate, and only sales above it earn the higher rate.

Commission = sales × commission rate. For a tiered plan, add each tier: (sales up to the threshold × rate 1) + (sales above it × rate 2). Total pay = base pay + commission.

Divide the commission by the sales and multiply by 100. $2,750 of commission on $50,000 of sales is a 5.5% effective rate.

The IRS treats commissions as supplemental wages, so they are taxed as ordinary income with Social Security and Medicare. If the employer pays commission separately from regular wages, it can withhold a flat 22% federal income tax (37% on supplemental wages above $1 million in a year), or add it to regular wages and withhold as one payment (IRS Publication 15, 2026). Withholding is a prepayment; your actual tax is settled on your return.

With the 22% flat method, $550 of federal income tax. Social Security (6.2%) and Medicare (1.45%) add $191.25, for $741.25 before any state tax. The bonus tax calculator does the same math with state tax.

There is no standard rate. It depends on the product, the margin, the sales cycle and whether there is a base salary. Check what the plan costs you as a share of gross margin, not only of sales.

Either, depending on the plan. Paying on gross margin protects you from discounting; enter margin dollars as the sales amount to model that.