Most real estate agents are self-employed for federal tax: the IRS treats a licensed agent paid on sales, under a written contract saying they aren’t an employee, as a “statutory nonemployee.” Your brokerage sends a 1099-NEC instead of a W-2, nothing is withheld, and you pay income tax plus 15.3% self-employment tax on commission minus expenses, in quarterly estimated payments.

Why you’re self-employed

A licensed agent counts as self-employed when substantially all their pay is tied to sales rather than hours, and a written contract says they won’t be treated as an employee. That covers nearly every agent on commission. The result: you report commission on Schedule C, deduct the cost of doing the job, and pay tax on what’s left.

The deductions checklist

  • Car: showings, listings, inspections and closings at the 2026 standard rate (72.5¢ a mile to June 30, 76¢ from July 1), or actual costs. Keep a mileage log.
  • Licensing and dues: state license renewal, association and MLS dues, continuing education.
  • Insurance: errors and omissions, and the business share of car insurance if you use actual costs.
  • Brokerage costs: desk fees, transaction fees and franchise fees you pay yourself.
  • Marketing: signs, photography, staging you pay for, listing ads, website, CRM and lead services.
  • Phone and internet for the business share.
  • Client gifts: up to $25 per person per year. Closing gifts above that are capped at $25.
  • Meals with clients or prospects: 50%, with a note of who and why.
  • Home office if you have a space used only for the business: the home office guide.

Splits and fees

Check what your 1099-NEC shows. If the brokerage reports your gross commission and then takes its split and fees, the amounts it kept are deductible. If it reports only your net share, the split was never your income and there’s nothing to deduct. Deducting the split from a net figure counts it twice.

Commission comes in lumps

Three closings in May and none until August is normal. Nobody withholds, so move a fixed share of every commission into a separate account the day it arrives, and pay quarterly on April 15, June 15, September 15 and January 15. If your year is back-loaded, the annualized method can reduce any underpayment penalty for the early quarters. The 1099 tax calculator gives a share to set aside for your income and state.

Before the year ends

  • Total your mileage and check the log is complete.
  • Match your records to the brokerage’s year-end statement.
  • Buy equipment you need before December 31 if you want the deduction this year.
  • Consider a SEP-IRA or solo 401(k): self-employed retirement plans.

Questions, answered

Are real estate agents self-employed for taxes?

Usually. A licensed agent paid on sales, under a written contract saying they aren’t an employee, is a statutory nonemployee: self-employed for federal tax, with commission reported on a 1099-NEC.

What can real estate agents deduct?

Business mileage, license and MLS or association dues, continuing education, E&O insurance, desk and transaction fees, marketing, the business share of phone and internet, 50% of business meals, client gifts up to $25 a person, and a qualifying home office.

How much should a real estate agent set aside for taxes?

Enough for income tax, 15.3% self-employment tax on profit, and state tax: often 25% to 30% of each commission. The 1099 tax calculator works out a figure for your income and state.

Can I deduct my broker split?

Only if the brokerage reported your gross commission on the 1099-NEC. If it reported your net share, the split was never your income.

Sources

  1. Statutory nonemployees — IRS. When licensed real estate agents are self-employed.
  2. Publication 463, Travel, Gift, and Car Expenses — IRS. Mileage, the $25 gift limit and meals.
  3. Publication 334, Tax Guide for Small Business — IRS. Deductible business expenses on Schedule C.
  4. Standard mileage rates — IRS. The 2026 rates.