Are Virginia real estate agents employees or independent contractors?

Most Virginia real estate agents are independent contractors for tax purposes, not employees. Federal law treats licensed real estate agents as self-employed when substantially all of their pay is tied to sales rather than hours worked and they have a written contract saying they won’t be treated as employees for federal tax purposes. The IRS calls them statutory nonemployees. In practice, that means no tax withholding, self-employment tax on your net earnings, and quarterly estimated payments.

Independent contractor status changes your taxes. It doesn’t change who supervises your real estate work. Virginia’s licensing rules still run your compensation and advertising through your principal broker.

Keeton & Co publishes this article and recruits agents. Tax rules below come from the IRS, Virginia Tax and the Code of Virginia, linked throughout. Your tax professional is the right person to apply them to your situation.

What makes a real estate agent an independent contractor?

Under the IRS’s statutory nonemployee rule, a licensed real estate agent is treated as self-employed “for all federal tax purposes, including income and employment taxes,” if both of these are true:

1. Substantially all payments for their services are directly related to sales or other output, not to the number of hours worked.
2. Their services are performed under a written contract providing that they won’t be treated as employees for federal tax purposes.

That’s why the independent contractor agreement you sign with a brokerage matters. Read it before you join, and keep a copy.

Virginia has a parallel rule for unemployment insurance. Va. Code § 60.2-219 excludes service as a real estate salesperson from “employment” when all of it is paid solely by commission. Commission-only agents generally shouldn’t count on state unemployment benefits from brokerage income.

What taxes do self-employed agents pay?

Self-employment tax. The IRS self-employment tax rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You owe it if your net earnings from self-employment are $400 or more. For 2026, the Social Security part stops once your combined wages and self-employment earnings reach $184,500, and the Medicare part has no cap. Employees split these taxes with their employer; as a contractor, you pay both halves, though the IRS lets you deduct the employer-equivalent portion when figuring adjusted gross income.

Income tax, federal and Virginia, on your net profit after business expenses.

Estimated payments, because nobody withholds for you:

	Federal	Virginia
Who generally has to pay	Expect to owe $1,000 or more when you file (IRS)	Expect Virginia tax after withholding and credits to be more than $1,000 (Virginia Tax)
Form	1040-ES	760ES
2026 due dates	April 15, June 15 and September 15, 2026, and January 15, 2027	May 1, June 15 and September 15, 2026, and January 15, 2027

The next payment for both is due January 15, 2027. The IRS says you can generally avoid an underpayment penalty if you owe less than $1,000 after withholding and credits, or paid at least 90% of this year’s tax or 100% of last year’s, whichever is smaller (higher-income taxpayers have a different rule).

What expenses should you track?

The IRS lets businesses deduct ordinary and necessary business expenses. For agents, the costs worth tracking from day one usually include brokerage fees, association and MLS dues, license and education costs, marketing, technology, and vehicle use for showings. Which ones you can deduct, and how, is a question for your tax professional. Our guide on what it costs to be a real estate agent in Virginia lists the typical costs.

A simple habit helps: when a commission check lands, move a set share into a separate account for taxes before you spend anything. Ask your tax professional what percentage fits your income and deductions.

What doesn’t change because you’re a contractor?

Being an independent contractor doesn’t make you a separate brokerage. In Virginia:

• You’re paid through your broker. A salesperson or associate broker can accept compensation for licensed activity only from their principal or supervising broker, unless the principal broker gives prior written consent, under 18VAC135-20-280. Our article on whether a Virginia agent can accept a commission directly from a client covers that rule.
• Your advertising is supervised. All advertising must be under the direct supervision of the principal or supervising broker and in the firm’s name (18VAC135-20-190).
• Your broker audits the relationship. A principal broker’s required audit includes “agency or independent contractor relationships” (18VAC135-20-225).

How do brokerage fees fit into your tax picture?

Your commission split, cap and per-deal fees come out before you see a check, and those dollars aren’t take-home pay. Gross commission income minus brokerage costs minus business expenses is what you’re taxed on, and self-employment tax and income tax come out of that.

That’s why it pays to compare brokerages on total annual cost, not just the split. For reference, here’s Keeton & Co’s Individual Agent Commission Plan as published on keetonco.com/join on November 11, 2026: commission levels from 70/30 to 92/8 depending on deals or prior-year volume, a $20,000 annual cap, then 100% with a $200 transaction fee per deal; transaction coordination at $387 per deal; technology at $75 a month; and no E&O or office fee. A separate leads plan is available as an upgrade. The page’s worked example for a 20-deal agent with $200,000 in gross commission income shows $28,940 in cap, post-cap and transaction coordination fees, leaving $171,060 before the technology fee, business expenses and taxes. That’s an illustration from published plan terms, not a promise of income, and results vary by agent.

Our guide on comparing brokerage plans with your last 12 months shows how to run your own numbers.

What should you do next?

If you’re comparing brokerages and want to see how a plan would look with your actual production, our team at Keeton & Co Real Estate, the brokerage Daniel Keeton founded and leads as Broker, offers confidential brokerage-fit conversations. Reach out to our team or see how our plans work.