How Much of Each Commission Check to Set Aside

The first commission check is the moment the job becomes a business. Nothing was withheld. No one sent anything to the IRS on your behalf. The full amount landed in your account and roughly a third of it is not yours.

Agents who get burned rarely misunderstand this in principle. They get burned on the arithmetic — setting aside a percentage of the wrong number, or setting aside nothing for the first two quarters because the year started slow and then closing four deals in the fall.

Set aside a share of net, not gross

The single most common error: taking 25% of the commission that hit your account.

Your tax is calculated on net profit — commission income minus business expenses. An agent who brought in $120,000 in commissions and spent $30,000 on marketing, mileage, MLS dues, desk fees, and a transaction coordinator is taxed on $90,000, not $120,000.

That cuts both ways. Reserving 30% of gross over-saves, which is a nice problem. But an agent on a 60/40 split who reserves off gross commission income — the whole commission before the brokerage takes its share — reserves against money that was never theirs, and gives up on the exercise by June when the numbers stop making sense.

The number to reserve against is the money you actually keep, after the split, after the cap, after the fees, minus what you spend running the business.

The self-employment tax nobody warned you about

This is the piece that surprises first-year agents, because as a W-2 employee they never saw it.

Employees pay 7.65% of wages toward Social Security and Medicare, and their employer quietly pays a matching 7.65%. Self-employed, you are both halves: 15.3%, applied to 92.35% of net profit.

The effective rate on net profit is therefore 14.13% — before a dollar of income tax.

On $90,000 of net profit:

• $90,000 × 92.35% = $83,115 of net earnings from self-employment
• $83,115 × 15.3% = $12,717 of self-employment tax

Two adjustments soften it. The 12.4% Social Security portion stops once your earnings pass the annual wage base; the 2.9% Medicare portion never stops, and an extra 0.9% applies to earnings above $200,000 single or $250,000 married filing jointly. And half of your self-employment tax is deductible against income tax — $6,358 in the example above — which is an income-tax deduction, not a reduction in the SE tax itself.

Then income tax, minus the 20% agents keep

Federal income tax stacks on top, at your marginal rate, on your net profit reduced by that half-of-SE-tax deduction, your standard or itemized deduction, and the qualified business income deduction.

The QBI deduction is worth understanding properly, because it is worth a lot and agents assume they are excluded. They are not. The rule strips the deduction from “specified service trades or businesses” above certain income levels — and while brokerage services generally fall in that category, real estate agents and brokers are specifically carved out under Treas. Reg. §1.199A-5(b)(2)(xiv). You keep the full 20% above the thresholds where a consultant or an accountant would lose it.

For 2026 the relevant taxable-income figures are:

Filing status	Phase-in begins	Fully phased in
Single	$201,750	$276,750
Married filing jointly	$403,500	$553,500
Married filing separately	$201,775	$276,775

Above those thresholds the wage-and-property limitation starts to apply even for non-SSTBs — a different constraint than the SSTB cutoff, and one that matters most to agents with employees or an owned office. There is also a floor worth knowing for small years: if you have at least $1,000 of qualified business income, the deduction is at least $400 for 2026.

So what is the number?

Stack it up for that $90,000-of-net-profit agent:

• Self-employment tax: $12,717
• Federal income tax: depends on filing status, spouse’s income, and deductions — typically $7,000 to $11,000 for a single filer at this level after the half-SE and QBI deductions
• State income tax: $0 in nine states, 3% to 10%+ elsewhere

That lands between 22% and 30% of net profit for most solo agents, which is where the familiar rule of thumb comes from:

Set aside 25–30% of net profit — 30–35% if your state taxes income. Move it to a separate account the day the commission clears, not at quarter end.

The reason to move it immediately is behavioral, not fiscal. Money that sits in operating checking gets spent on lead gen in a slow month. A dedicated tax account turns the quarterly payment into a transfer rather than a decision.

The four dates, and why the calendar is uneven

Estimated tax payments for the 2026 tax year are due:

Payment	Covers income earned	Due
Q1	Jan 1 – Mar 31	April 15, 2026
Q2	Apr 1 – May 31	June 15, 2026
Q3	Jun 1 – Aug 31	September 15, 2026
Q4	Sep 1 – Dec 31	January 15, 2027

Note the periods. They are not quarters. Q2 covers two months, Q3 covers three, Q4 covers four. An agent who divides the annual estimate by four and pays on schedule is systematically early on Q2 and late on Q4 relative to when the income was actually earned — which is fine, and mildly in your favor.

None of the 2026 dates shift. When April 15 or one of the others lands on a weekend or a District of Columbia holiday, the deadline moves to the next business day — that is why the 2023 filing deadline was April 18. In 2026 the calendar is clean.

The safe harbor is the real answer for commission income

Commission income is lumpy in a way that makes the standard advice — estimate your annual income, divide by four — nearly useless. You cannot forecast in April whether a $2M listing closes in October.

The safe harbor solves this. Pay in, across the year, at least:

• 100% of your total tax from last year, or
• 110% of last year’s total tax if your prior-year AGI was over $150,000 ($75,000 if married filing separately)

Hit that and you owe no underpayment penalty, regardless of how much better this year turned out. You still owe the balance on April 15 — the safe harbor protects against the penalty, not the tax. But it converts an unanswerable forecasting problem into arithmetic you can do in January from a document you already have.

For an agent whose income swings 40% year to year, this is almost always the right target.

Two levers for a lumpy year

Annualized income installments. If your income genuinely arrives unevenly — small first half, enormous fourth quarter — Form 2210’s Schedule AI lets you compute each quarter’s required payment from the income you actually earned in that period, instead of assuming an even quarter. It is more work, and it is the correct answer for an agent who closes a $70,000 commission in November. Without it, the IRS assumes that income accrued evenly all year and treats your Q1 and Q2 payments as short.

Withholding, if there is a W-2 in the household. Withholding is treated as paid evenly across the year no matter when it was actually withheld. So a spouse’s December paycheck adjustment can retroactively cure a Q1 shortfall in a way that a December estimated payment cannot. If you are behind in November and your spouse has wages, that is usually the cheapest fix available.

What this needs from your records

All of the above runs on one input: net profit to date. Not gross commission, not what is in checking — commission income received, minus categorized business expenses, as of today.

That number is trivial to produce if expenses are categorized as they occur and impossible to produce in the second week of September if they are not. Which is the whole argument for doing the boring part weekly:

1. Commission clears → move the set-aside percentage to a separate account the same day.
2. Categorize the week’s expenses on Friday, while you still remember what the charge was for.
3. Before each due date, check net profit to date against your safe-harbor target and pay the difference.

ListingLedger keeps a running net-profit figure from your categorized income and expenses, applies the self-employment and QBI math for the current year, and shows what each quarterly payment should be against the safe harbor — with the next due date on the dashboard rather than in a notebook. The deduction guide covers what belongs in that expense number, and the mileage guide covers the deduction most likely to be missing from it.