Real Estate Agent Taxes, Explained
Most agents are 1099 independent contractors paid in lumpy commission checks with nothing withheld. That makes proactive tax planning — deductions plus quarterly estimates — essential to avoid a brutal April.
Mileage and vehicle costs add up fast
Showings, open houses, inspections, and closings mean serious driving. At $0.725/mi (2026) the standard mileage deduction is often an agent's largest write-off. Keep a contemporaneous log; Gigaverse tracks business miles automatically so the deduction holds up.
Marketing, MLS, and license deductions
Agents have deep, agent-specific deductions: MLS dues, license renewal, E&O insurance, brokerage desk fees, signage, photography, staging, client gifts (within limits), lead-gen subscriptions, and CRM software. These are real Schedule C expenses that meaningfully lower taxable commission income.
Commission income and quarterly estimates
Commission arrives unevenly and untaxed. You owe 15.3% self-employment tax on 92.35% of net profit plus income tax, with estimated payments due roughly Apr/Jun/Sep/Jan. Setting aside a slice of each commission check as it lands prevents a quarterly scramble.
Watch for the S-corp question
At higher, steady commission income, some agents elect S-corp status to reduce self-employment tax — but it adds payroll and admin and isn't worth it for everyone. It's a per-situation decision for a tax professional, not a default.
Frequently asked
What can real estate agents deduct?+
Mileage at $0.725/mi (2026), MLS and license fees, E&O insurance, desk/brokerage fees, marketing, photography, staging, CRM software, and client gifts within IRS limits — all on Schedule C. Your deduction depends on your activity.
How do agents handle taxes on commission?+
No one withholds from commission, so the IRS expects quarterly estimated payments and you owe self-employment tax plus income tax. Setting aside ~25-30% of each check (adjusted for deductions) is a common starting point; an estimate from your numbers is more precise.
Should a real estate agent form an S-corp?+
Sometimes — at higher, stable income an S-corp can reduce self-employment tax, but it adds payroll costs and complexity. It's a case-by-case decision; consult a tax professional.
Let Gigaverse handle it automatically
Auto-tracked deductions Quarterly estimates Portable IRA
Educational estimates only — not tax, legal, or investment advice. Gigaverse is not a bank; brokerage services via a FINRA/SIPC-member broker-dealer. Outcomes depend on your individual circumstances.