Sales Commission Calculator
Calculate pay for a period from base salary plus a two-tier sales commission (one rate up to a threshold, a higher rate above it) and a bonus for reaching the threshold.
Last updated: October 2026
Total Gross Pay
$6,000.00
This calculator gives an estimate for general information only. It is not financial, tax or investment advice. Check the figures with a qualified professional before making decisions, and follow the rules that apply where you live.
Formula below · 1 source (IRS) · Updated Oct 2026
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About this calculator
This calculator handles a common plan: a base pay, one commission rate on sales up to a threshold (often the quota), a higher rate on sales above it, and a bonus for reaching the threshold.
total pay = base + min(sales, threshold) × rate 1 + max(0, sales − threshold) × rate 2 + bonus if sales ≥ threshold
The higher rate applies only to the sales above the threshold, like tax brackets. With the defaults (base $3,000, sales $50,000, 3% up to $25,000, 5% above, $1,000 bonus): $3,000 + $750 + $1,250 + $1,000 = $6,000. Commission is $2,000, an effective 4% of sales.
Use amounts for the same period: if the threshold is a monthly quota, enter monthly base pay and monthly sales.
Other plan designs
For a flat commission, set both rates to the same value and the bonus to 0. For pure commission, set base pay to 0. Plans with more tiers, retroactive accelerators (where the higher rate applies to all sales once quota is hit), draws or clawbacks need the actual plan terms.
Taxes
Commissions and bonuses are supplemental wages for federal withholding (IRS Publication 15): if paid separately from regular wages, employers often withhold a flat 22%. The amounts here are gross pay before taxes.
How to use
Enter base pay and sales for the period, the two rates, the threshold and any bonus. Example 1 (defaults): $3,000 + 25,000 × 3% + 25,000 × 5% + $1,000 = $6,000. Example 2: sales of $20,000 (below the threshold): $3,000 + 20,000 × 3% = $3,600; no second-tier commission and no bonus. Example 3: flat 8% commission with no base: base 0, both rates 8, bonus 0, sales $40,000 → $3,200.
Frequently asked questions
How do you calculate tiered commission?
Apply each rate only to the sales in its tier and add the results. With 3% up to $25,000 and 5% above, $50,000 of sales earns $750 + $1,250 = $2,000.
What is an effective commission rate?
Total commission divided by total sales. $2,000 on $50,000 is 4%, between the two tier rates.
What is on-target earnings (OTE)?
Base pay plus the commission you would earn at exactly 100% of quota. Enter sales equal to the quota to see it.
How are commissions taxed?
As ordinary wages. For withholding, the IRS treats them as supplemental wages; when paid separately employers often withhold a flat 22% federal income tax plus FICA.
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