Commission calculator
Work out commission on a sale, with a flat rate or two tiers, plus base pay.
- ๐บ๐ธ US federal & state rules
Commission earned
$2,000.00
5% of $40,000 in sales
This is an example. Enter your numbers above and press the button to see your own result.
Commission at other sales levels
| $20,000 | $1,000.00 |
|---|---|
| $30,000 | $1,500.00 |
| $50,000 | $2,500.00 |
| $60,000 | $3,000.00 |
| $80,000 | $4,000.00 |
- Commission is taxable wages. Employers usually withhold it at the flat supplemental rate when it is paid separately from regular wages.
- Draws against commission, chargebacks for returns and team splits are not included.
Show the math
| Commission | $40,000 ร 5% = $2,000.00 |
|---|
What to do next
How it works
For a flat plan, commission is the sales amount times the rate. For a two-tier plan, sales up to the target earn the first rate, and sales above it earn the second. Base pay, if any, is added on top.
The effective rate is total commission divided by total sales. On a tiered plan it sits between the two rates.
Things to keep in mind
Commission plans vary a lot. Some pay on gross margin instead of revenue, some have quarterly accelerators, some claw back commission when a customer cancels. Those rules are not modeled here.
Under federal law, inside sales employees paid mostly on commission can still be owed overtime unless an exemption applies. Outside sales employees are generally exempt.
Frequently asked questions
How is commission calculated?
Multiply the sales amount by the commission rate. $40,000 in sales at 5% pays $2,000. Tiered plans pay a higher rate only on the sales above a target.
Is commission taxed differently?
No, it is ordinary wages. When it is paid in a separate check, employers often withhold federal tax at the flat 22% supplemental rate, which can make the check look smaller. It evens out on your tax return.
What is a draw against commission?
An advance that is later subtracted from the commission you earn. If your commission comes in below the draw, some plans carry the shortfall forward. This calculator does not model draws.
Does the tiered rate apply to all sales?
In this calculator, no. The higher rate applies only to the part of your sales above the target. Some plans pay the higher rate on everything once you cross the target, so check your plan.