- Tax returnsSchedule C or S corporation returns, with every commission reconciled.Learn more about Tax returns →
- S corporation planningWhen an S corporation election starts saving self-employment tax.Learn more about S corporation planning →
- BookkeepingCommissions, splits and expenses tracked monthly, not rebuilt in April.Learn more about Bookkeeping →
- Agents who investRental properties, depreciation and real estate professional status.Learn more about Real estate investing →
How agents are taxed
- Independent, not employees. A licensed agent paid by commission under a written agreement is a “statutory nonemployee” under Section 3508, so the brokerage doesn’t withhold tax. Your commissions are reported on Form 1099-NEC.
- Self-employment tax. On top of income tax, net earnings carry 15.3% self-employment tax on the first $184,500 for 2026 (the Social Security wage base) and 2.9% Medicare tax above it.
- Quarterly estimates. Payments are due April 15, June 15, September 15 and January 15. Paying in at least 100% of last year’s tax (110% if your income was over $150,000) through estimates avoids the underpayment penalty, even in a record year.
- The QBI deduction. Real estate brokerage is not a “specified service” business, so agents can generally take the 20% qualified business income deduction. At higher incomes, the deduction depends on wages paid, which an S corporation salary can help.
Deductions agents commonly miss
- Your car. Showings, listing appointments, open houses, inspections and closings are business miles. The 2026 IRS rate is 72.5 cents per mile through June 30 and 76 cents from July 1. A log kept as you drive is what holds up.
- Marketing. Signs, photography, online ads, your website and printed materials. Client gifts are deductible up to $25 per recipient per year.
- The cost of being licensed. License renewals, continuing education, MLS and association dues, errors and omissions insurance, desk fees and the share of commissions paid to your brokerage.
- Tools. Phone, CRM and transaction software, and a home office used regularly and exclusively for the business.
- Meals. 50% of business meals with clients and referral partners, with a note of who attended and what was discussed.
When an S corporation makes sense
Once net commissions are consistently well above a reasonable salary for your work, an S corporation election can reduce self-employment tax. Before electing, confirm with your broker and your state’s real estate rules how commissions can be paid to your entity. A solo 401(k) can then shelter up to $24,500 of your pay for 2026, plus an employer contribution, up to $72,000 in total (more with catch-up contributions after 50).
Agents who also invest
Licensed agents can qualify as real estate professionals: more than 750 hours a year and more than half of your working time in real property businesses, with material participation in your rentals. That can let rental losses offset commission income. The hours need records.
Frequently asked questions
Are real estate agents employees or self-employed?
Most are self-employed for tax purposes. A licensed agent paid by commission under a written agreement is a statutory nonemployee, so nothing is withheld and you pay self-employment tax and quarterly estimates.
Do real estate agents get the QBI deduction?
Generally, yes. Real estate brokerage is not a specified service business, so agents can take the 20% deduction, subject to wage limits at higher incomes.
What can a real estate agent deduct?
Business mileage, marketing, signs and photography, license and MLS fees, E&O insurance, desk fees and broker splits, phone and software, a qualifying home office, client gifts up to $25 per person a year and 50% of business meals.
Should a real estate agent form an S corporation?
Often once net commissions are well above a reasonable salary. First confirm how your broker and state rules allow commissions to be paid to your entity.
How do I avoid an underpayment penalty after a big year?
Pay at least 100% of last year’s tax (110% if your income was over $150,000) through quarterly estimates. That safe harbor applies even if this year’s commissions are much higher.