How commission is calculated
Commission is a percentage of a sale: sale amount × commission rate. If you share it with a broker, employer or team, multiply by your share of the split. For example, a 3% commission on a $400,000 home sale is $12,000; with a 70/30 split, the agent keeps $8,400.
The calculator can also work backward: enter your income goal to see how much you would need to sell in a year.
Common commission setups
- Straight commission – pay depends entirely on sales.
- Base salary plus commission – a steady salary with a smaller commission on top.
- Tiered commission – the rate rises after you pass sales targets.
- Real estate splits – agents share commissions with their brokerage, and each side of a sale is often negotiated separately.
Frequently asked questions
How are commissions taxed?
Commission is taxable income. Employers often withhold federal tax on it at a flat 22% supplemental rate; independent contractors get no withholding and should pay quarterly estimated taxes.
Are real estate commission rates fixed?
No. Commissions are negotiable between sellers, buyers and their agents.
What is a draw against commission?
An advance paid regularly that is later subtracted from the commissions you earn.