Calculators
Tip Credit Calculator
Calculate the tip credit an employer may take, whether tips bring pay up to minimum wage and any top-up owed for a pay period.
- Runs in your browser
- Nothing uploaded
The tool
Enter your numbers below. Results update as you type, and nothing leaves your browser.
Everything you enter stays on your own machine. Nothing is sent to us or to anyone else, which you can confirm in your browser network tab.
What people use it for
- Restaurant payroll checks
- Setting tipped wages
- Understanding a tipped payslip
- Compliance reviews
About this tool
What the Tip Credit Calculator does
Under the US Fair Labor Standards Act, employers can pay tipped employees a lower cash wage and count tips towards the minimum wage, called a tip credit. If cash wage plus tips falls short of the full minimum wage for the hours worked, the employer must make up the difference. Several states do not allow a tip credit.
It also works as a tip credit tipped minimum wage calculator.
Formula
- Maximum tip credit = full minimum wage − cash wage
- Required = minimum wage × hours
- Top-up = required − (cash wage × hours + tips), if positive
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Full minimum wage per hour | $7.25 |
| Cash wage paid per hour | $2.13 |
| Hours worked in the period | 30 |
| Tips received in the period | $210 |
| Result | Value |
|---|---|
| Employer top-up owed | $0.00 |
| Effective hourly pay | $9.13 |
| Maximum tip credit per hour | $5.12 |
| Tip credit used in the period | $153.60 |
| Total pay including tips | $273.90 |
How to read the result
Employers must inform employees about the tip credit in advance to claim it, and tips generally belong to the employee.
States such as California, Washington and Minnesota require the full minimum wage before tips; check your state.
Based on US federal rules. State and local rules may differ; check before applying.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
The amount of tips an employer counts towards the minimum wage, allowing a lower cash wage.
$2.13 per hour in cash wages, with tips making up the rest of the $7.25 federal minimum.
The employer must pay the difference so the employee earns at least the minimum wage.
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