Enter the sale amount and rate for a flat commission, or switch on tiered commission to apply a higher rate above a threshold.
On the values this page opens with — a $25,000 sale, 5% flat, or 5% up to a $10,000 threshold and 8% above it — the two structures are not close:
That is $450 more on one deal, and it works out to a blended rate of 6.80% rather than either of the headline numbers. The blended rate is the figure to quote when comparing offers, because neither 5% nor 8% describes what you actually earned.
The higher rate applies only to the portion above the threshold, exactly like a tax band — a distinction worth being sure of before signing, because some plans genuinely do apply the higher rate retroactively to the whole sale once you cross. Those are far more generous and much rarer. If the plan is silent on which it is, ask, and get the answer in writing.
A tiered plan only pays more than a flat one once you clear the threshold, and every sale below it earns the base rate. That has a practical consequence most commission plans are designed around: the closer you are to a tier boundary, the more each additional sale is worth, so the incentive to push a deal over the line — or to hold one back until the next period, when it would land above the threshold rather than below it — becomes strong.
If your threshold resets monthly and a deal is going to close near the boundary, run both scenarios here before deciding when to book it. The difference is often larger than it feels.
A persistent myth, and it costs people real money in bad decisions. Commission is ordinary income and lands in the same tax bands as salary. What differs is the withholding: many payroll systems treat a large commission payment as supplemental income and withhold at a flat statutory rate, which is often higher than your marginal rate. That makes the cheque look brutally taxed on the day.
It corrects at year end — over-withholding comes back as a refund. The figure this calculator returns is gross commission, before any withholding, so expect the amount that lands in your account to be lower and do not read the gap as a tax rate. See the paycheck calculator for how income tax and payroll deductions stack on regular pay.
A flat commission pays the same rate on every dollar of a sale — simple to calculate and predict. A tiered commission pays a base rate up to a set threshold and a different, usually higher, rate on the portion above it, rewarding higher sales volumes with a better effective rate on the top slice of a big deal. Toggle "Tiered commission" above to see both structures applied to the same sale amount.
Most commonly it's a percentage of the sale price or gross revenue, which is what this calculator assumes. Some structures instead use gross profit (sale price minus cost of goods) as the base, especially in industries with highly variable margins like used cars or wholesale goods, where basing commission on the top-line price could reward a low-margin deal as much as a high-margin one. Confirm which base your specific commission plan uses, since it changes the payout meaningfully.
In the US, commission is often withheld at a flat supplemental wage rate rather than regular payroll withholding tables, though it's still ordinary taxable income once you file your return. The withholding mechanics can differ from your base salary, but your ultimate tax liability is calculated the same way as any other earned income — see the Salary Calculator for a broader take-home pay estimate.
Rates vary enormously by industry — from under 1% on some high-ticket real estate or wholesale transactions to 20%+ in certain direct sales or insurance roles — so there's no single universal figure to benchmark against. Check the norm for your specific industry and role rather than assuming a standard rate applies broadly.
Worked example: a $25,000 sale at a flat 5% rate earns $25,000 × 5% = $1,250.00. Under a tiered structure with a $10,000 threshold at 5% and 8% above it: commission = $10,000 × 5% + ($25,000 − $10,000) × 8% = $500 + $1,200 = $1,700.00 — $450 more than the flat-rate payout on the same sale.
Tracking commission alongside base pay? See the Salary Calculator for full take-home pay.