See what you really earn per hour in a tipped job. Enter your cash wage, hours and tips to get your effective hourly rate, weekly and annual pay, and a check of whether your tips cover the employer's tip credit or the employer owes make-up pay.
Last updated:
Hours & pay rates
$
Federal minimum cash wage for tipped employees: $2.13
$
Federal $7.25; use your state or city rate if higher
Tips
Enter tips as
$
Cash and card tips before tip-out
$
%
Enter your values to see the result.
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How to use the Tipped Employee Wage Calculator
Enter your weekly hours, your cash wage and the minimum wage that applies where you work.
Add your tips as a weekly total or an hourly average, plus any tip-out you give.
Keep overtime on if you are paid overtime after 40 hours in a workweek.
Press Calculate wage to see your effective hourly rate and the tip credit check.
Review the breakdown to see how much of your pay comes from wages, tips and any make-up pay.
Tipped wage formulas
Tip credit = minimum wage − cash wage (federal maximum $5.12/h)
Make-up pay = max(0, tip credit × hours − tips kept) for the workweek
Overtime cash rate = cash wage + ½ × minimum wage = 1.5 × minimum wage − tip credit
Example: 30 hours at $2.13 with only $90 in tips. The tip credit needed is $5.12 × 30 = $153.60, so the employer owes $63.60 of make-up pay. Total pay is $63.90 + $63.60 + $90 = $217.50, exactly $7.25 per hour.
Federal tipped wage figures
Item
Federal amount
Notes
Minimum wage
$7.25 / hour
Unchanged since July 2009; states and cities may set higher rates
Minimum cash wage for tipped employees
$2.13 / hour
Employer must still ensure $7.25 with tips
Maximum tip credit
$5.12 / hour
$7.25 − $2.13
Overtime cash wage (over 40 h)
$5.755 / hour
1.5 × $7.25 − $5.12
Tipped employee threshold
More than $30 / month in tips
Below this the tip credit cannot be used
Tips for tipped workers
Track your hours and tips every shift so you can check that your pay meets the minimum each workweek.
Know your local rate. Many states and cities set tipped cash wages and minimum wages well above the federal figures.
Tips belong to employees. Managers and supervisors may not keep any part of employees' tips, though valid tip pools among eligible workers are allowed.
Report all tips to your employer for taxes; reported tips also count toward Social Security and some benefits.
Frequently asked questions
What is the tipped minimum wage?
Under the federal Fair Labor Standards Act, employers may pay tipped employees a cash wage as low as $2.13 per hour if tips bring them up to the full $7.25 federal minimum wage. Many states set a higher cash wage, and some require the full state minimum wage before tips.
What is a tip credit?
The tip credit is the part of the minimum wage an employer covers with the employee's tips instead of cash. Federally it is at most $7.25 − $2.13 = $5.12 per hour. If your tips do not reach that amount over the workweek, the employer must pay the difference.
How is my effective hourly rate calculated?
Add your cash wages, any make-up pay and the tips you keep after tip-out, then divide by hours worked. For example, 35 hours at $2.13 plus $450 in tips is $74.55 + $450 = $524.55, or about $14.99 per hour.
How is overtime calculated for tipped employees?
Overtime is based on the full minimum wage, not the cash wage. The overtime rate is 1.5 × minimum wage minus the same tip credit, which is $10.875 − $5.12 = $5.755 per hour federally. Tips are not used to raise the overtime premium.
Which states do not allow a tip credit?
Several states, including Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, require employers to pay the full state minimum wage before tips. In those states enter the same value for cash wage and minimum wage. Other states and cities have their own tipped rates, so check your local labor department.
Is the minimum wage check done per shift or per week?
Under federal law the check is done for each workweek: total tips are compared with the tip credit for all hours in that week. Some states apply stricter rules, such as per shift or per pay period.
Are tips taxable?
Yes. Cash and card tips are taxable income and must be reported to your employer, who withholds payroll taxes on them. This calculator shows gross earnings before taxes and other deductions.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.