Restaurant, Delivery & Services
Last reviewed: May 2026
Compute gratuity, split bills, see per-person totals. U.S. servers earn $2–$5/hr base and rely on tips for most income.1
| Service | Standard | Great |
|---|---|---|
| Restaurant | 18–20% | 22–25% |
| Delivery | 15–20% | 20–25% |
| Bartender | $1–2/drink | $2–3 |
| Hair stylist | 15–20% | 20–25% |
| Taxi | 15–20% | 20%+ |
| Takeout | 0–10% | 10–15% |
Tipping in the U.S. is unusual globally — few countries expect 15-25% gratuity. The system exists because the FLSA permits employers to pay tipped workers just $2.13/hour (unchanged since 1991), with tips expected to bring total compensation to at least $7.25/hour. Servers at busy restaurants often earn $20-35/hour including tips, while those at slow establishments may barely clear minimum wage — creating enormous income volatility.
Your tip doesn't go entirely to your server. Tip pools redistribute to bussers (1-2% of sales), bartenders (10-15% of bar sales), and sometimes food runners and hosts. A 2018 DOL rule expanded pooling to kitchen staff if the employer pays full minimum wage. Your 20% tip may break down as: server 70%, busser 15%, bartender 10%, host 5%.
Etiquette experts recommend tipping on the pre-tax subtotal. On a $100 bill with $8 tax, tipping 20% on $108 adds $1.60 extra. Over a year of dining out, it adds up. The difference ranges 5-10% depending on your local sales tax rate.
Credit card tips are fully tracked for taxes. Cash tips technically must be reported too, but compliance varies. Some restaurants deduct the 2-3% credit card processing fee from tips — prohibited or restricted in California, Massachusetts, and New York.
In Japan, tipping is considered rude. In most of Europe, 5-10% is generous since service charges are often included. Australia appreciates but doesn't expect tips. Some countries add mandatory service charges (10-15%) — additional cash directly to your server is optional. Always research tipping customs before traveling.
Cornell research shows tip amounts are only weakly correlated with service quality. Stronger factors: servers writing "thank you" on the check (11-16% increase), brief touch on the shoulder (14-24% increase), and drawing smiley faces (18% increase for women servers). Bill size dominates — people tip a percentage, so absolute amounts scale with spending regardless of service. Tips also increase in sunny weather, when servers introduce themselves by name, and when checks are presented with credit card logos.
Tipping is one of those cultural norms that most people practice without fully understanding. At its core, the American tipping system is a labor subsidy: customers directly supplement worker wages, and employers are allowed to pay a lower base wage in exchange. The federal tipped minimum wage has been $2.13 per hour since 1991 — that's 35 years without adjustment, even as the standard minimum wage has risen to $7.25 and many states have pushed beyond $151.
This means that for a full-service restaurant server working 30 hours per week, base pay alone yields just $63.90 per week before taxes. Tips aren't a bonus — they're the paycheck. Understanding this context is what separates tipping out of obligation from tipping with intention.
The percentage should always be calculated on the pre-tax subtotal, not the total after sales tax. This is the technically correct method endorsed by etiquette experts and the restaurant industry3. On a $85.00 dinner with 8% sales tax ($6.80), the correct base for a 20% tip is $85.00 — yielding $17.00, not $18.36. The difference is small on a single check, but it adds up over a year of dining out.
Worked example — dinner for two: Your pre-tax subtotal is $124.50. Sales tax at 8.25% adds $10.27, making the total $134.77. At 20%, your tip is $124.50 × 0.20 = $24.90. The total you pay is $134.77 + $24.90 = $159.67. If splitting between two people, each person pays $79.84.
You don't need a calculator at the table. Here are three reliable shortcuts:
The 10% double method (for 20%): Move the decimal one place left to get 10%, then double it. On a $67 bill: 10% = $6.70, doubled = $13.40. That's your 20% tip.
The 10% + half method (for 15%): Find 10%, then add half of that. On a $67 bill: 10% = $6.70, half of that = $3.35, total = $10.05.
The round-up method (for 20%): Round the bill to the nearest $10, then take 20% of that rounded number. $67 rounds to $70; 20% of $70 = $14.00. Slightly generous, always easy.
Several situations call for adjustments beyond the standard 18–20%:
Large parties (6+): Many restaurants automatically add 18–20% gratuity. Check your bill before adding more. If auto-gratuity is included, additional tipping is optional but appreciated for exceptional service.
Discounted meals and gift cards: Always tip on the original pre-discount amount. If you used a $50 gift card on a $75 meal, tip on $75 — not the $25 you paid out of pocket. The server did the same work regardless of how you paid4.
Comped items: If the manager removes a dish from your bill due to a kitchen error, tip on what the full bill would have been. The server didn't cause the problem and shouldn't absorb the cost.
Takeout and counter service: Tipping norms have shifted significantly since 2020. For sit-down restaurants offering takeout, 10–15% is increasingly common. For counter-service restaurants (where you order at a register), tipping remains optional — these workers typically earn full minimum wage, not the tipped minimum.
Delivery apps: Tip at least $5 or 20%, whichever is more. Delivery drivers use their own vehicles, pay for their own gas, and the app takes a significant cut of the delivery fee. A $3 tip on a $15 order barely covers the driver's fuel costs.
Tips are taxable income. The IRS requires servers to report all tip income, and most restaurants now auto-report credit card tips. A server who earns $200 in tips on a shift will owe roughly $30–$50 in federal and state income taxes plus FICA, depending on their bracket1. When you leave a $20 tip, the server takes home approximately $14–$17 after taxes.
Cash tips, while harder to track, are still legally required to be reported. The practical reality is more nuanced, but from the customer's perspective, knowing that roughly 75–85% of your tip reaches the server's pocket provides useful context for how much to leave.
American tipping norms don't translate internationally. In Japan, tipping is considered rude — it implies the worker isn't being paid fairly. In most of Europe, a small rounding-up (5–10%) is appreciated but not expected, since service workers earn living wages. In Australia, tipping is uncommon except at high-end restaurants. Before traveling, research local norms to avoid either insulting your server or dramatically overpaying2.
There's a growing backlash against "tipflation" — the expansion of tipping prompts to contexts where tips weren't traditionally expected (self-checkout, counter service, drive-throughs). A 2024 Pew Research survey found that 72% of Americans view tipping culture negatively, even as average tip percentages continue rising. Some restaurants have experimented with no-tipping models that build service costs into menu prices, though most have reverted due to lower server take-home pay and customer resistance to higher sticker prices.
Regardless of where you stand on the debate, the current reality in the U.S. is that sit-down restaurant servers, bartenders, and delivery drivers depend on tips for most of their income. Until the system changes, tipping appropriately is both an economic and ethical consideration.
How you pay affects how much the server keeps. Credit card tips are automatically reported to the IRS through the merchant processing system, so taxes are always deducted. Cash tips are harder to track, which is why many servers prefer them — though they're still legally required to be reported. Some restaurants pool tips across the entire staff (bartenders, bussers, food runners), so your server may only keep 60–80% of the tip on a credit card transaction.
When paying with a gift card, tip on the full pre-discount amount and pay the tip separately — either in cash or on a credit card. If the bill is $90 and you have a $50 gift card, tip on $90, not the $40 you're paying out of pocket.
Research from Cornell University's Center for Hospitality Research shows that service quality actually explains less than 5% of the variation in tip amounts. The biggest factors are: the size of the bill (which the percentage is based on), the customer's default tipping habit, and social pressure when dining with others. Interestingly, small personal touches by the server — writing "thank you" on the check, crouching to eye level at the table, or touching the customer's shoulder briefly — increase tips by 12–23% on average, according to multiple peer-reviewed studies. The tip amount is more about psychology than performance, which is part of what makes the system controversial.
If you're self-employed or entertaining clients, business meal tips are deductible as part of the total meal expense. The current deduction is 50% of the total meal cost including tip (temporarily increased to 100% for restaurant meals in 2021–2022, now back to 50%). Keep your receipts and note the business purpose, attendees, and date. On a $200 client dinner with a $40 tip, $120 is deductible ($240 total × 50%). For frequent business diners, this adds up to meaningful tax savings over the year.
If you eat out regularly, tips represent a significant and often untracked expense. Dining out twice a week with an average bill of $60 and a 20% tip means $24/week — or $1,248/year — in tips alone. For families that eat out more frequently, annual tip spending can easily reach $2,000–$3,000. Tracking this category separately in your budget provides a more accurate picture of your dining costs and helps identify where spending adjustments can be made. Many budgeting apps now break out tips as a separate line item for this reason.
For service workers who earn tips — bartenders, servers, delivery drivers — tracking tip income is equally important. The IRS requires reporting all tip income, and accurate records protect you during audits. Keep a daily log of cash tips received, and your employer should provide records of credit card tips on your pay stub. Unreported tips don't just create tax liability — they also reduce your reported income, which affects Social Security benefits, loan applications, and unemployment insurance eligibility.
→ Tip on pre-tax. The correct base.
→ 10% shortcut. Move decimal left, then adjust.
→ $3–5 minimum for delivery. Even on small orders.
→ Cash when possible. Goes directly to server.
See also: Percentage · Sales Tax · Discount