How the tip income calculator works
Enter one shift or a whole week. Choose how your tip-out is set: a percentage of sales, a percentage of tips, or a fixed amount. If you enter your sales, the calculator also shows your tips as a percentage of sales, a common way to compare shifts. For a closer look, read how to calculate tips per hour, or add a year of tips to the annual income calculator.
Tip income formula
Worked examples
6 hours at $12.00, $200 in tips, $20 tip-out
- Wages: 6 × $12.00 = $72.00.
- Tips kept: $200 − $20 = $180.00.
- Total: $252.00, or $42.00 an hour.
Same shift, tipping out 3% of $800 in sales
- Tip-out: $800 × 3% = $24.00.
- Tips kept: $176.00; total $248.00, or $41.33 an hour. Tips were 25% of sales.
Tips by sales
Tips at common tip percentages, before tip-out.
| Sales | 15% | 18% | 20% | 22% |
|---|---|---|---|---|
| $500 | $75.00 | $90.00 | $100.00 | $110.00 |
| $800 | $120.00 | $144.00 | $160.00 | $176.00 |
| $1,000 | $150.00 | $180.00 | $200.00 | $220.00 |
| $1,500 | $225.00 | $270.00 | $300.00 | $330.00 |
| $2,000 | $300.00 | $360.00 | $400.00 | $440.00 |
Tip rules to know
- Tips belong to employees. Under the federal FLSA, employers may not keep any part of employees' tips, and managers and supervisors may not share in a tip pool.
- Tip credit. Federal rules let employers pay a cash wage of at least $2.13 an hour and count tips toward the minimum wage, as long as wages plus tips reach at least the federal minimum wage. Many states set a higher cash wage or do not allow it.
- Tip pools. Pools limited to employees who customarily receive tips are allowed. Pools that include back-of-house staff, such as cooks, are allowed only when every worker is paid at least the full federal minimum wage directly.
Frequently asked questions
How do I calculate my hourly rate with tips?
Add your wages and the tips you keep after tip-out, then divide by hours worked. $72 in wages plus $180 in kept tips over 6 hours is $252 ÷ 6 = $42 an hour.
What is a tip-out?
Money a server shares with coworkers such as bussers, bartenders, or food runners. It is often set as a percentage of sales or of tips, or as a fixed amount per shift.
Can my employer keep part of my tips?
Under the federal FLSA, employers may not keep any portion of employees’ tips, whether directly or through a tip pool. Managers and supervisors may not take tips from a pool. See Fact Sheet #15 in the sources.
What is a tip credit?
Under federal rules, an employer may pay a tipped employee a cash wage as low as $2.13 an hour and count tips toward the rest of the federal minimum wage, as long as wages plus tips reach at least the minimum wage. Many states set higher cash wages or do not allow a tip credit.
Do I have to report my tips?
Tips are taxable income. The IRS asks employees to keep a daily record of tips and to report tips to their employer. Tips from one job that total less than $20 in a month do not have to be reported to that employer. See IRS Publication 531.
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How this calculator was built. The formula, defaults, and edge cases are documented in a research record and covered by automated tests. It estimates gross amounts from your inputs; it does not determine legal entitlements, taxes, or take-home pay. Read our methodology and disclaimer.
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