Commission

Commission paystub meaning: Pay earned as a share of what you sell — ordinary wages, often withheld at the flat 22% supplemental rate, and counted in your...

Pay earned as a share of what you sell — ordinary wages, often withheld at the flat 22% supplemental rate, and counted in your overtime rate.

Commission is pay tied to what you sell rather than to time worked: a percentage of revenue or margin, a flat amount per unit, an override on a team's sales, a residual on a renewal. The Department of Labor is blunt about the legal footing — the Fair Labor Standards Act does not require the payment of commissions. Your plan document, and your state's wage payment law, decide how commission is earned, when it vests, and what happens if the customer cancels. For tax it is simply wages: Social Security at 6.2% up to $184,500 in 2026, Medicare at 1.45% with no ceiling, plus income tax withholding. What differs is the withholding method. The IRS treats commission as supplemental wages, so when it is paid separately from regular wages an employer may withhold federal income tax at the flat 22% rate — 37% on supplemental wages above $1 million in a calendar year — instead of running it through your W-4. That flat rate is a collection rule, not a tax rate; the difference is settled on your return. The part nobody publishes: if you are non-exempt, commission earned in a week enters your regular rate for overtime. Straight-time pay plus commission, divided by hours worked, gives the regular rate, and the extra half-rate is owed on hours past 40. Commission paid later has to be allocated back and the overtime recomputed. One exception exists. Under FLSA Section 7(i), a commissioned employee of a retail or service establishment can be exempt from overtime when their regular rate exceeds one and one-half times the applicable minimum wage in every overtime week and more than half their earnings over a representative period are commissions.

Earnings lines should identify the applicable rate, hours or units, current amount, and year-to-date total. Reconcile them with time records, the pay period, the employment agreement, and the employer-issued statement.

When this term appears on a statement, read its label, current amount, year-to-date amount, pay-period context, and any adjacent rate or hours together. Resolve a mismatch with the original issuer or the cited authority rather than changing a record to force a preferred result.