Tipped Wage & Tip Credit Calculator
Cash wage, tips, and the floor
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Planning indicator only. It does not assess every part of a household's finances or replace individualized professional advice.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the cash wage your employer pays you an hour. The federal floor is $2.13, but only a minority of tipped workers are actually on it — about 27 states set a higher tipped cash wage, and eight jurisdictions ban the tip credit outright, so the cash wage there is the full state minimum.
- 02
Enter the hours you worked for the whole WORKWEEK, not a single shift. The minimum-wage test is measured over the week, so a dead Tuesday can be carried by a busy Saturday.
- 03
Enter the tips you received before any tip-out, then the tip-out you paid into the pool. The page reports the tips you keep and prices the tip-out as a share of what you took.
- 04
Set the weeks a year you work, then check the two statutory fields: the minimum wage that applies to you (federal $7.25, unchanged since 24 July 2009) and the maximum tip credit ($5.12, the gap between $7.25 and $2.13).
- 05
Read the cash owed per overtime hour first — $5.755 at the federal defaults — and compare it against the row below it showing what 1.5 times your cash wage would wrongly give. Then read the top-up, which is what your employer owes if cash plus tips missed the floor.
Formula
Tip credit an hour = the lesser of the maximum credit and (applicable minimum − cash wage), floored at zero. It is zero once the cash wage already meets the minimum. Regular rate for the overtime formula = the greater of the applicable minimum and the cash wage, so the formula stays correct where a state cash wage exceeds the federal floor. Cash owed per overtime hour = regular rate × multiplier − tip credit. Federally: 1.5 × $7.25 − $5.12 = $5.755. Cash wages = cash wage × straight hours + that overtime cash rate × overtime hours. Floor for the week = applicable minimum × straight hours + applicable minimum × multiplier × overtime hours. Counted = cash wages + (tips received − tip-out). Top-up = floor − counted, floored at zero. What the week actually paid an hour = (counted + top-up) ÷ hours worked.
Example
A $2.13 cash wage, 46 hours in the workweek, $520 of tips and a $78 tip-out. Forty hours are straight time and six are overtime. The tip credit is $5.12 an hour, the full federal maximum, so cash wages are 40 × $2.13 plus 6 × $5.755 = $120, and the credit the employer claims across the week comes to $236 — your own tips paying that share of your own minimum wage. You keep $442 of the $520 after tipping out 15.0%. The floor for the week is 40 × $7.25 plus 6 × $10.875 = $355; cash plus tips reaches $562, clear of it by $206, so no top-up is owed. The week paid $12.21 an hour, and 48 weeks like it is $26,963. The correction is the line worth checking: had payroll used 1.5 × $2.13 = $3.195 for those six overtime hours instead of $5.755, the week would be $15.36 short — $737 across the year.
Definitions
- Tip credit
- The amount of your tips an employer may count toward its own minimum-wage obligation. Federally capped at $5.12 an hour, and conditional on your cash plus tips actually reaching the minimum.
- Cash wage
- What the employer itself pays per hour before any tip is counted. The federal floor is $2.13; about 27 states require more and eight jurisdictions require the full minimum.
- Tipped employee
- Someone who customarily and regularly receives more than $30 a month in tips. Below that threshold no tip credit may be taken against your wage at all.
- Tip-out / tip pool
- Tips shared with other tipped staff — bussers, runners, bartenders. Lawful; a pool including managers or supervisors is not, at any establishment.
- Top-up
- The difference an employer must pay when cash wages plus tips fall short of the applicable minimum for the workweek. Not a favour and not discretionary.
- Dual jobs
- Working two genuinely separate roles for one employer — server and dishwasher, say. The tip credit may be taken only on the tipped role.
Good to know
The tip credit is a subtraction, not a wage
The most damaging misconception about tipped work is that $2.13 is a wage. It is not; it is what remains of the minimum wage after the employer has been allowed to count your tips toward it. The obligation never changes: every hour must deliver at least the applicable minimum wage. The tip credit simply lets the employer satisfy part of that obligation with money customers gave you. Federally the arithmetic is $7.25 minus $2.13, which is the $5.12 maximum credit, and none of the three figures has moved since 24 July 2009. Reading it as a subtraction rather than as a wage makes the rest of the page obvious. A state with a higher cash wage has a SMALLER credit available, because the gap it fills is smaller. Eight jurisdictions permit no credit at all, so the employer pays the full state minimum in cash and every tip is genuinely on top — economically a completely different job, and the reason the cash wage on this page is a field rather than a constant. About 27 further states set a tipped cash wage somewhere above $2.13, 31 set a general minimum above $7.25, and five have no state minimum wage law at all, so the federal floor governs there by default. There is also a condition on claiming the credit that has nothing to do with arithmetic: the employer must inform you in advance that it intends to take it, including the amount claimed and the fact that all tips are yours. An employer that never gave that notice may not take the credit at all, and owes the full minimum in cash for every hour worked, tips or no tips. That notice failure alone accounts for a large share of successful tipped-wage claims, and it costs nothing to ask whether the notice was ever given.
Tipped overtime is $5.755, and almost every system gets it wrong
This is the arithmetic worth checking your payslip for, and it is worth checking because the wrong answer is intuitive and the right one is not. The overtime rate for a tipped employee is one and a half times the FULL minimum wage, and the tip credit is subtracted AFTERWARDS. Federally: 1.5 × $7.25 = $10.875, less the $5.12 credit, leaves $5.755 of cash the employer must pay for every overtime hour. The wrong method multiplies the cash wage — 1.5 × $2.13 = $3.195 — and is short by $2.56 for every single overtime hour worked. The reason it happens so often is mechanical rather than malicious: payroll software holds one hourly rate per employee, that field contains $2.13, and the overtime routine multiplies whatever is in it. Nothing in the system knows that the number in the field is a residual rather than a rate. On the default week here, six overtime hours makes the difference $15.36. Multiply by 48 weeks and it is $737, which is the sort of figure that funds a claim, and the FLSA reaches back two years, or three where the violation was wilful, with liquidated damages available to double it. The way to check is to open the payslip and look at the cash rate applied to overtime hours, not the total. If it reads $3.195, or $3.20, or anything close to one and a half times your cash wage, the calculation is wrong. If it reads $5.755, or $5.76, it is right. The page shows all three candidates side by side for exactly this reason — the wrong method, the correct method, and what the hour would pay if no credit were claimed at all ($10.875) — because the middle figure is much easier to recognise when the other two are next to it. One more consequence: the tip credit claimed against an overtime hour can never exceed the credit permitted per hour, so the credit does not scale up with the multiplier even though the wage does.
The weekly test, and the top-up nobody volunteers
The tip credit is conditional, and the condition is a piece of arithmetic run over the workweek. Cash wages plus the tips you actually kept must reach the applicable minimum for every straight-time hour and one and a half times it for every overtime hour. If they do not, the employer must make up the difference — a top-up that is neither optional nor a favour, and one that almost nobody volunteers. The unit matters enormously. The test is run over the WORKWEEK and not the shift, so a dead Tuesday lunch that on its own would look like a violation is carried by a busy Saturday night and owes nothing. The converse is also true: a genuinely quiet week is a genuine top-up however good the month around it was, and a worker who only ever looks at a single bad shift will conclude wrongly in both directions. On the default week the floor is 40 × $7.25 plus 6 × $10.875, which is $355; cash wages of $120 plus $442 of retained tips reach $562, clear by $206, and nothing further is owed. Two details in that sentence decide real cases. The first is 'retained' — the tips counted are what you keep after a valid tip-out, not what landed on the table, so a heavy tip-out lowers the figure being tested against the floor and can create a top-up obligation where the gross tips suggested none. The second is that the employer's liability is measured before tax: the withholding taken out of your cash wage to cover tax on your tips is your money leaving, not the employer's obligation shrinking, which is why a payslip can show almost no net cash and still be entirely lawful. If your own week comes out below the floor, the top-up stat is the number to raise, and raising it in the same pay period is far easier than reconstructing it later.
Whose tips they are: pools, managers and the vacated 80/20 rule
Tips belong to the employee who earned them. A valid tip pool is the only lawful mechanism for moving them, and the rules around it are unusually firm. Managers and supervisors may NEVER receive from a tip pool, at any establishment, whatever the role is called — the test is the duties actually performed, not a job title, and a working shift lead who mostly runs food is judged on what a manager's duties are, not on the name on the schedule. An employer that keeps any portion of an employee's tips loses the tip credit entirely for the hours in question and owes the full minimum in cash. Where an employer takes no tip credit at all and pays the full minimum itself, it is permitted to run a broader pool that includes back-of-house staff such as cooks and dishwashers — which is one reason some restaurants moved to a no-credit model. The most confusing area right now is side work, because the law changed recently and most guidance online has not caught up. The 2021 dual-jobs regulation, which capped tip-credit work on non-tipped duties at 20% of the shift and at 30 continuous minutes, was VACATED on 23 August 2024, and the Department restored the 1967 regulatory text at 29 C.F.R. 531.56(e) effective 17 December 2024. So there is no federal 20% cap and no 30-minute rule at present. What survives is the older and broader dual-jobs test: an employee who genuinely works two separate jobs for one employer may have the tip credit taken only on the tipped one. Rolling silverware for an hour before service is not a second job; spending a whole shift as a dishwasher is. Finally, the tax side, which is a different question about the same dollars: tips are wages, must be reported to the employer by the 10th of the following month once they reach $30, and carry Social Security and Medicare like any other wage. The federal income-tax deduction for reported tips reduces neither the minimum your employer must reach nor the FICA taken from every tip dollar.
Frequently asked questions
What is the tip credit, exactly?
It is a subtraction, not a wage of its own. The employer must still deliver the full minimum wage for every hour; the tip credit lets it count part of your tips toward doing so. Federally the credit is capped at $5.12, which is precisely the gap between the $7.25 minimum and the $2.13 cash wage. Your tips are therefore paying $5.12 of your own minimum wage for every hour the credit is claimed — $236 in the default week here.
Why is my overtime cash rate $5.755 rather than $3.195?
Because the credit comes off AFTER the multiplier, never before. The overtime rate is one and a half times the FULL minimum: 1.5 × $7.25 = $10.875. The $5.12 tip credit is then subtracted, leaving $5.755 of cash per overtime hour. Multiplying the cash wage instead — 1.5 × $2.13 — gives $3.195 and is short by $2.56 for every overtime hour. Six overtime hours makes that $15.36 in one week and $737 across 48 weeks. Payroll systems make this error constantly because the field they reach for holds $2.13.
What happens if my tips were bad this week?
The employer must make up the difference, and it is not optional. If cash wages plus the tips you kept do not reach the applicable minimum for the workweek — one and a half times it for the overtime hours — the employer owes the shortfall as a top-up. In the default week, $120 of cash plus $442 of tips comes to $562 against a floor of $355, so nothing further is owed. Reverse the tips and the top-up stat is what the employer must pay.
Is the minimum-wage test run per shift or per week?
Per workweek. That is why this page asks for a week of hours and a week of tips rather than one night's. A slow Tuesday on its own can look like a violation and be nothing of the kind once Saturday is included. The flip side is that a genuinely bad week is a genuine top-up, however good the month was.
Can my manager take a share of the tip pool?
Never. Managers and supervisors may not receive from a tip pool whatever the establishment calls the role — the test is the duties performed, not the job title. An employer that keeps any part of an employee's tips loses the tip credit entirely for those hours and owes the full minimum in cash. Where the employer takes no tip credit and pays the full minimum itself, it may run a broader pool that includes back-of-house staff.
Does my state even allow a tip credit?
Eight jurisdictions do not. There the employer pays the full state minimum in cash and every tip sits on top of it, which is a completely different job economically. About 27 more states set a tipped cash wage above $2.13 without banning the credit, 31 set a general minimum above $7.25, and five have no state minimum wage law at all so the federal floor governs. The Department of Labor publishes the state table and revises it twice a year — put your own two figures into the cash wage and applicable minimum fields rather than trusting a default.
Is the 80/20 rule still in effect?
No, and most guidance online has not caught up. The 2021 dual-jobs regulation — the one capping tip-credit work on non-tipped duties at 20% of the shift and 30 continuous minutes — was vacated on 23 August 2024, and the Department restored the 1967 regulatory text at 29 C.F.R. 531.56(e) effective 17 December 2024. There is no federal 20% cap and no 30-minute rule at present. The older dual-jobs test survives: an employee working two genuinely separate jobs for one employer takes the tip credit only on the tipped one.
Do I have to report my tips, and why is my cash wage so small on the payslip?
Tips are taxable wages and must be reported to the employer by the 10th of the following month where they reach $30 or more. The withholding on all those tips has to come out of something, and the only thing the employer holds is the cash wage — which is why a $2.13 wage can arrive as almost nothing. The separate federal income-tax deduction for reported tips is a different question about the same dollars, with its own cap and eligibility, and it changes neither the minimum your employer must reach nor the Social Security and Medicare taken from every reported tip.