How Do You Calculate Taxes on Commission?


Quick Answer

Tax rates on commission fall into three different categories: a flat tax rate, aggregate rate and rate for commissions over $1 million, according to the Houston Chronicle. The tax rate applied depends on the type of earner and the amount of commission.

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Full Answer

For commissions under $1 million for earners who are having other taxes withheld from regular wages in the same year, a flat tax rate of 25 percent should be applied, reports the Houston Chronicle. For earners who are not having taxes withheld in the same year, the tax rate for withholding should be the same as the tax withholding rates for regular wages of the last payment to the employee. For commissions over $1 million, a 35 percent withholding tax rate applies.

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