How to use the tipped wage calculator
- Enter the hours you worked and the cash wage per hour that your employer pays before tips.
- Enter the tips you received for the same hours and the share of tips you paid out to others, if any.
- Enter the minimum hourly wage that applies to you. It differs by state and city, so use the figure for where you work.
- Read your effective hourly pay with tips, your total pay, and whether you are short of that minimum.
Formula
Tips you keep = tips x (100% - tip out %)
Total pay = cash wage x hours + tips you keep
Effective hourly pay = total pay / hours
Shortfall = minimum wage x hours - total pay, if above zero
This compares total pay with the minimum wage you enter. It does not decide how any tip credit is allowed to work where you live.
30 hours at $5 a hour with $450 in tips
Cash wages are 30 x $5.00 = $150.00. Adding $450.00 in tips gives total pay of $600.00, an effective $20.00 an hour. At a minimum wage of $12 the minimum pay for 30 hours would be $360.00, so you are not short.
On a slow week with only $100 in tips, total pay is $250.00, or $8.33 an hour. The gap to $360.00 is $110.00. If you pay out 10% of the $450 in tips, you keep $405.00 and total $555.00.
Why the cash wage can be below the minimum
In some places employers may pay a lower cash wage to workers who receive tips, as long as the cash wage and tips together reach the full minimum. When they do not, the employer is generally expected to make up the difference. The rules differ between federal, state and local law and by the type of worker and employer.
This page uses the minimum you enter and leaves the rest to the rules that apply to you. It shows the arithmetic so you can see how the pieces add up and compare it with your pay stub.
Tip pooling and tip out
Many workplaces share tips with kitchen staff, bartenders or a pool. Enter the share you pay out and the tool uses what you keep. To split a pool among people by hours, use the tip pool calculator, and for the customer side of tipping the tip calculator helps.
For gross pay and overtime on the same hours, see the gross pay calculator and the overtime calculator.
Assumptions and limits
- The cash wage and minimum wage are examples. Enter the figures from your pay stub and your local rules.
- Tips are for the same hours as the wages.
- Overtime, tip credit limits, tip pooling rules and taxes are not modeled.
- Rules vary by state, employer and contract. This is not legal or payroll advice.
Frequently asked questions
How do I calculate my hourly pay with tips?
Add your cash wages and the tips you keep, then divide by the hours worked. With $150 in wages and $450 in tips over 30 hours, that is $20.00 an hour.
What is the difference between my cash wage and the minimum wage?
The cash wage is what the employer pays directly. In some places it can be lower than the minimum if tips make up the difference. The tool shows the gap per hour between your cash wage and the minimum you enter.
What if my tips and wages do not reach the minimum?
The tool shows the shortfall against the minimum you entered. In many places the employer is expected to cover it, but the rule depends on where you work, so check with your state labor agency.
Should tip out be subtracted?
If you pay out part of your tips to others, enter that share. The tool then uses only the tips you keep for total pay and the hourly figure.