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This question is about salary.
Why is commission taxed so high?
Commission is taxed high because of the way your employer withholds taxes. If your commission is paid on a monthly, quarterly, or annual basis, then you pay taxes at a supplement rate.
IRS guidelines require employers to withhold a 25% rate on top of withholdings for Medicare and Social Security taxes.
If your employer pays out commissions as part of your weekly, bi-weekly, or monthly salary, then your commissions are taxed at a far lower rate because your commissions are then considered regular wages.
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