How is commission-only pay taxed?
The same as any other wages, taxed at your ordinary marginal rate based on total annual income -- commission income isn't a special tax category. Whether your PAYCHECK's withholding matches that liability exactly depends on how your employer processes the commission (see the next two questions), but the actual tax you owe is the same either way.
Is commission withheld differently than a regular paycheck?
It depends on how your employer pays it, per IRS Publication 15. If commission is combined with your regular wages and not identified as a separate amount, your employer withholds as if the total were one regular paycheck -- ordinary wage-bracket withholding, not a flat supplemental rate. IRS Publication 15's own example: an employee paid a $1,000 base salary plus a $500 commission, combined and not separately identified, has withholding calculated on the full $1,500 using the regular wage-bracket tables. If instead your employer pays commission as a SEPARATE, identified payment from your regular wages, it's withheld under the "supplemental wages" rules instead -- typically a flat 22% federal rate, same as a bonus.
What if I'm paid entirely by commission, with no base salary?
IRS Publication 15's supplemental-wages examples all assume a base salary exists alongside the commission -- a purely commission-only arrangement, with no separate regular-wage payment to compare against, isn't spelled out as its own example in the publication. In practice, a commission-only employee's regular commission payments function as their regular wages (there being no other regular wage to distinguish them from), so ordinary wage-bracket withholding is the common outcome -- but this isn't independently confirmed in Pub. 15's text for the zero-base-salary case specifically.
Does my state withhold commission at a different rate than a bonus?
Some do. California's EDD, for example, publishes a lower flat rate (6.6%) for commissions specifically identified as supplemental wages, distinct from the higher rate (10.23%) it uses for bonuses and stock compensation -- but this only applies when commission is actually being withheld under the supplemental-wages rules in the first place (see above), not when it's combined into a regular paycheck.
Does a draw against future commission change how it's taxed?
A draw is generally still taxable wages when paid, regardless of whether it's later reconciled against commissions earned -- the tax treatment follows when the money is actually received, the same cash-method principle that applies to back pay. How a specific draw arrangement nets out against future commission is a compensation-structure question this calculator does not model.
