Commission — Payroll Definition

What is Commission? Clear definition and explanation for payroll professionals, HR managers, and employees.

What is Commission?

A commission is a form of variable pay calculated as a percentage of sales revenue or profit. Common structures include straight commission (100% commission, no base salary), base + commission, tiered commission (higher percentage at higher sales levels), and draw against commission. Commissions are subject to all standard payroll taxes including FICA and income tax withholding.