Tip Credit Calculator
Free 2026 tip credit calculator for servers, bartenders, and other tipped workers. Plug in your state, hours, cash wage, and tips earned to see your effective hourly rate, the tip credit your employer claimed, and whether you're owed makeup pay to hit the full minimum wage.
Tip Credit Calculator
Did your cash wage plus tips actually reach minimum wage this workweek? This calculator works from your side of the paystub. Pick your state, drop in your hours and tips, and find out how much tip credit your employer is claiming, whether you hit minimum wage, and what makeup pay you may be owed under federal and state law.
Your state
Hours worked this workweek
Hourly cash wage from employer
The pre-tip hourly rate listed on your paystub.
Total tips this workweek
Cash plus card tips, after tip-out. Use your Server44 export totals if you log there.
Overtime hours (over 40)
Optional. Triggers FLSA overtime computation at 1.5x the full minimum wage.
Estimates only, not legal or tax advice. Locality minimum wages (NYC, Seattle, Chicago, parts of DC, others) may exceed the statewide values used here. Check with your state labor commissioner or the U.S. Department of Labor Wage and Hour Division before relying on any number for legal action. Florida's $15.00 / $11.98 step lands September 30, 2026. Connecticut and New York vary by waitstaff vs. bartender or service vs. food service classification.
View all Server44 toolsWhat is a tip credit?
A tip credit is the slice of your paycheck your employer expects your tips to cover. Under FLSA Section 3(m), federal law lets employers pay tipped workers a cash wage as low as $2.13 per hour, so long as your tips bring the total up to at least the federal minimum wage of $7.25. The $5.12 gap is the "tip credit."
From the worker side, the practical question isn't what the credit is in theory. It's whether your cash wage plus the tips you actually pulled in this week hit the minimum wage threshold. If they didn't, your employer owes you the difference for that workweek.
How tip credit math works in 2026
The FLSA test runs each workweek. The formula:
(Cash wage × hours) + tips ≥ Full minimum wage × hours
Worked example, federal rules: 40 hours at $2.13 cash wage = $85.20 in hourly pay. Add $400 in tips for the week and you're at $485.20, or $12.13 per hour effective. That's well above the $7.25 federal minimum, so the employer can legally claim the full $5.12 tip credit per hour.
Slow week version: same 40 hours, same $2.13 cash wage, but tips drop to $150. Cash plus tips = $235.20, or $5.88 per hour. That falls short of $7.25 × 40 = $290, so your employer owes you $54.80 in makeup pay for that workweek. The test runs Monday through Sunday (or whatever your employer's defined workweek is), not per shift.
States that don't allow a tip credit
Seven states require employers to pay tipped workers the full state minimum wage in cash, with tips entirely on top: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. In those states the tip credit is $0, and any cash wage below the state minimum is a wage violation no matter how much you pull in tips.
DC takes its own approach. Under Initiative 82, the tip credit phases out over time, with the cash wage minimum climbing each year until it matches the full minimum. Other states sit somewhere in between, with cash wage minimums above $2.13 but still below their full minimum. For a state-by-state lookup, see the tipped minimum wage by state tool.
Localities can also push minimums above the state floor. NYC, Seattle, Chicago, Denver, and parts of DC all have their own tipped wage rules. This calculator works off statewide 2026 values. If you work in a high-cost city, check your local labor department's published rate.
If your tips don't cover the credit
Makeup pay isn't a favor. It's a legal obligation. If a workweek leaves you short of the full minimum wage, your employer has to add the difference to that paycheck. The most useful thing you can do as a worker is document the week: shifts, hours, cash wage paid, tips reported, and any tip-out you owed.
If your employer refuses to pay makeup wages, file a complaint with the U.S. Department of Labor Wage and Hour Division (1-866-487-9243) or your state labor commissioner. Most states also have anti-retaliation protections, so a complaint can't legally be used against you.
If you want to keep weekly totals tidy without spreadsheet gymnastics, the Server44 app logs cash and card tips, tracks tip-outs, and exports clean workweek totals you can drop into a complaint or hand to a wage attorney.
Frequently Asked Questions
Common questions about tip credit calculator
What is a tip credit?
A tip credit is the dollar amount of your tips that your employer is allowed to count toward your minimum wage under FLSA Section 3(m). It's the gap between the full federal or state minimum wage and the lower cash wage your employer pays you directly. If your tips don't fill that gap in a given workweek, the employer has to make up the difference.
What is the federal tip credit in 2026?
Under federal law (FLSA), the maximum tip credit is $5.12 per hour. That's the gap between the federal minimum wage of $7.25 and the federal cash wage floor of $2.13 for tipped employees. Plenty of states set higher minimums and a smaller (or zero) tip credit.
Which states don't allow a tip credit?
Seven states require employers to pay the full state minimum wage in cash to tipped workers, with tips on top: Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington. In those states, the tip credit is effectively $0.
What happens if my tips don't cover the tip credit?
If your cash wage plus tips for the workweek is less than the full minimum wage times your hours, your employer legally owes you the difference as makeup pay. The test runs each workweek, not per shift or per day.
How is overtime calculated for tipped employees?
Under FLSA, the overtime regular rate is the full minimum wage, not the $2.13 cash wage. Time-and-a-half is calculated against the full minimum, and your employer can't claim a bigger tip credit on overtime hours than on straight-time hours.
Does the tip credit apply to side work like cleaning or rolling silverware?
The DOL rescinded the 80/20/30 rule in December 2024, so the older strict cap on related non-tipped work no longer applies. Employers may still take the tip credit for tasks that directly support tipped work (rolling silverware, refilling condiments, light cleaning) when they happen alongside your tipped duties. A standalone non-tipped shift counts as a separate job, and the tip credit doesn't apply there.
Can my employer take a bigger tip credit on overtime hours?
No. The per-hour tip credit during overtime is capped at the same amount used for straight-time hours. Taking a larger credit on OT hours is a common payroll error and a wage violation.
Do credit card processing fees reduce my tips for tip credit purposes?
Employers can legally deduct a proportional share of the card processing fee from credit card tips in most states. The tips you actually pocket after that deduction still have to satisfy the minimum wage test for the workweek, and your employer is on the hook for any shortfall.