Commission Definition

Commission refers to the amount of money employees receive on the basis of their performance (e.g., sales).

Commission Extended Definition
Commission is money that employees generally receive on top of their base salary. Employees can receive commission payments when they make a sale or accomplish a certain goal.

Commission-based payment amounts are based on the employee’s productivity or performance. It can be a percentage of the sales or a fixed amount per sale.

Commissions are a type of supplemental pay. Like regular wages, commissions are subject to taxes. Employers can use a flat supplemental tax rate of 22% or withhold taxes on the employee’s commission income and regular wages using income tax brackets.

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Publication 15 (Circular E), Employer’s Tax Guide

Last Updated By

Rachel Blakely-Gray | Feb 15, 2023