Personal Finance

Tip

A voluntary payment to service workers, typically a percentage of the bill, given as thanks for good service.

Also known as: gratuity, service charge, tipping

What You Need to Know

A tip (also called gratuity) is an optional payment given directly to service workers in recognition of quality service. While voluntary, tipping is customary and often expected in the United States service industry.

Standard Tipping Rates:

  • Sit-Down Restaurants: 15-20%
  • Fast Casual/Counter Service: $1-2 or 10-15%
  • Bartenders: $1-2 per drink or 15-20% of tab
  • Food Delivery: 15-20%, minimum $3-5
  • Coffee Shops: $1 per drink or 15%
  • Hair Stylists: 15-20%
  • Spa Services: 20%
  • Taxi/Uber: 15-20%
  • Valet: $2-5
  • Hotel Bellhop: $1-2 per bag
  • Housekeeping: $2-5 per night

How to Calculate Tips Quickly:

  • 15%: Divide bill by 10, then add half (or move decimal left, then add half)
    • $50 bill: $5 + $2.50 = $7.50
  • 20%: Divide bill by 10, then double
    • $50 bill: $5 × 2 = $10
  • 18%: Find 10% and 8%, add together
    • $50 bill: $5 + $4 = $9

Pre-Tax vs. Post-Tax Tipping: Traditionally, tips are calculated on the pre-tax amount. However, many people tip on the total (including tax) for simplicity. Both are acceptable.

When NOT to Tip:

  • Fast food (unless exceptional service)
  • Carryout (optional 10% appreciated)
  • Flight attendants (against policy)
  • Government employees (postal workers, DMV)

Tipping on Discounts/Comps: Tip on the original bill amount before discounts or comps. The server provided the same service regardless of your discount.

Digital Tipping: Apps and credit card readers often suggest tip percentages. Review the suggested amounts as they may be calculated on the post-tax total or inflated.

Sources & References

This information is sourced from authoritative government and academic institutions:

  • dol.gov

    https://www.dol.gov/agencies/whd/flsa/tips