Tip Split Calculator

Tip arithmetic is trivial; the interesting part is the allocation rule. An even split divides the grand total by headcount, while a proportional split assigns each person their own item subtotal plus a share of the tip equal to their share of the bill, which is what matters when one diner ordered a salad and another ordered steak and two cocktails. Current US restaurant convention runs roughly 15 percent for adequate service, 18 to 20 percent for good service, and 25 percent or more for exceptional service. Tipping on the pre-tax subtotal is the traditional basis; on a 100 dollar bill with 8 percent tax, tipping 20 percent post-tax adds only about 1.60 dollars, which is why either convention is accepted in practice. Two structural caveats matter more than the rounding. First, the federal tipped minimum cash wage has been 2.13 dollars per hour since 1991, with employers permitted to claim a tip credit of up to 5.12 dollars to reach the 7.25 dollar federal minimum; a number of states, including California, Oregon, Washington, Nevada, Montana, Minnesota, and Alaska, require the full state minimum wage before tips. Second, an automatic gratuity added for a large party is not a tip at all. Under IRS Revenue Ruling 2012-18, effective from January 2014, mandatory service charges are treated as wages rather than tips, so check the bill for an included service charge before adding a second gratuity on top.

The popular story that tip is an acronym for to insure promptness is folk etymology invented long after the fact. The word appears in seventeenth-century English cant meaning simply to hand over or give, and the practice of gratuities to servants spread through European aristocratic households before American travellers carried it home after the Civil War. Tipping was not quietly accepted in the United States. It was attacked as an undemocratic import that created a servile class, and between roughly 1909 and 1915 about half a dozen states, beginning with Washington, passed laws attempting to ban it outright. Every one of those statutes was repealed or struck down by the mid-1920s. William Scott's 1916 polemic The Itching Palm remains the best-known artifact of that campaign. Instead of disappearing, tipping was written into wage law. Restaurant workers were largely excluded from the 1938 Fair Labor Standards Act, and when the 1966 amendments brought them into coverage, Congress created the tip credit that lets employers count tips toward the minimum wage. That structure is a large part of why American tipping percentages are higher than European ones, since the tip is substituting for wages rather than supplementing them. The most recent shift is technological: touchscreen point-of-sale terminals introduced from around 2010 began presenting default tip prompts at counters that had never taken tips, pushing suggested percentages upward.