Business mileage or actual vehicle costs
Track client showings, listing visits and other business trips with contemporaneous records; commuting is different.
How do real estate agent taxes work in 2026?
Real estate income often arrives in bursts while business costs continue every month. A percentage-based reserve can work well operationally, but it should be recalculated when annual commissions change. Mileage, MLS and association costs, marketing, signs, photography, software and broker-related fees can materially reduce business profit.
The IRS says gig-economy income is taxable even when the work is part-time, temporary or not reported on an information return. Use the forms you receive to reconcile your records, but base the tax estimate on the complete business activity required by the tax rules.
EXPENSES TO REVIEW
Common tax deductions for a real estate agent
These are categories to review, not automatic deductions. A cost still needs to meet the tax rules and be supported by records.
MLS, association and professional fees
Business-related memberships, MLS access and licensing costs may be relevant.
Marketing and listing costs
Photography, signs, print materials, digital ads and website costs can be ordinary business expenses.
Software and phone
CRM, transaction tools and business-use phone costs can reduce profit.
Broker and transaction fees
Keep closing statements and brokerage records showing fees connected to commissions.
Real estate agent 1099 taxes: plan your reserve around commissions
Real estate commissions are uneven, so the tax reserve should be recalculated as annual profit changes. The mini calculator estimates the current percentage using gross commission income, business expenses and state, then shows how much of each $1,000 of revenue the model suggests reserving.
How much should a real estate agent set aside for taxes?
Use a percentage tied to expected full-year profit, not the size of one closing. A large commission can move more income into higher tax brackets, while deductible business costs can reduce the profit subject to tax.
What real estate agent expenses can reduce business profit?
Mileage or vehicle costs, MLS and association fees, licensing, listing photography, signs, advertising, CRM software, business-use phone costs and broker or transaction fees are common categories to review and document.
Should taxes be saved from every commission?
Operationally, moving the modeled reserve from each commission into a separate tax account can make uneven income easier to manage. Recalculate after unusually large closings or major changes in annual expenses.
Use the mileage deduction calculator for documented business driving and the quarterly tax calculator when you need to estimate the next payment rather than the savings reserve.
RECORDKEEPING
What records should you keep?
- Commission and closing statements
- Mileage log
- MLS/association/license receipts
- Marketing, listing and broker-fee records
AVOID THESE
Common real estate agent tax mistakes
- Saving tax only when commissions are large and ignoring smaller months
- Using a fixed percentage after annual income rises materially
- Treating commuting as client-business mileage
- Missing broker or transaction fees that reduce profit
QUARTERLY TAXES
Do you need estimated tax payments?
Self-employed 1099 workers may need estimated payments during the year. The amount to save and the amount to send this quarter are separate questions. If you also have a W-2 job, payroll withholding can affect how much tax remains unfunded.
1099 forms are not the whole tax return
The IRS states that gig-economy income is taxable even if no Form 1099-K, 1099-NEC or other information return is issued. Keep your own income and expense records and reconcile them to any forms you receive.
Why this is more useful than “just save 30%”
The mini calculator uses the same documented 2026 planning engine as Analyze My Income's main 1099 tools. It starts with gross 1099 income, subtracts the business expenses you enter, estimates self-employment tax, federal income tax and the selected state income-tax path, then expresses modeled taxes as a share of gross 1099 revenue. The full calculator can also account for W-2 wages, withholding, health insurance and payments already made.
RELATED GUIDES
More 1099 tax guides
Now run the same 1099 income through your state
Your profession changes common expenses; your state changes the individual-income-tax layer. Pick a state calculator to keep those two questions separate.