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Tipping Etiquette

For most service industry professionals, tips aren’t just a bonus to their paycheck—it is their paycheck. Don’t get caught looking like a scrooge when you go out—read up on tipping etiquette in the U.S.

You might wish there had been a class on tipping somewhere in your schooling—and you wouldn’t be alone. In addition to figuring out taxes, understanding the American tipping system might be one of the most confusing aspects of adulthood not taught in school.

Follow this easy guide on tipping so you never have to wonder again if you should be handing over a few extra dollars—or how many.

A Rule of Thumbtip jar

In the U.S., service industry professionals are paid far less than the federal minimum wage. In fact, restaurant servers are only required to be paid $2.13 per hour because the government and their employers expect them to make the majority of their wages through tips.

With this in mind, a good rule of thumb is to tip servers a standard 15%, or 20% for exceptional service. If service was terrible, it’s up to you to decide if you want to tip less. But keep in mind that in the case of servers, kitchen staff and others also contributed to your experience. If you’re part of a large group (usually five or more people), the restaurant may automatically add a 15% gratuity to the bill.

When patronizing a new business, read their contract, pamphlets, or signs by the cash register to see if the business has any explicit rules about tipping. A gratuity may be built into a service (many cruises tack on a prepaid gratuity charge or add it at the end to your account), or they may tell you not to tip if they pay their employees more than an industry standard.

How to Calculate a Tip

Tips should be based on the pretax total. Here’s an easy way to quickly calculate any tip.

Let’s say your pretax total for eating out is $22.50. To figure out 10% of that amount, move the decimal place to the left by one number.

$22.50 à $2.25

Now that you know 10% of the bill, you can multiply it by 2 to get 20% ($4.50), or multiple it by 1.5 to get 15% ($3.38, rounded up).

If the amount doesn’t equal an even dollar amount, it’s common courtesy to round up to the next dollar.

Professionals You Should Tip

Workers who rely on tips for a portion of their wages can be put into one of two groups: those who receive small cash tips or those who receive tips based on a percentage of the pretax bill. This follows the logic that more complicated or intensive services receive a larger tip.

Small Cash Tips:

Percentage of Total Pretax Bill:

When planning an outing where you know tips will be expected, make sure to include it in your budget. No one wants to explain to a hardworking server that they aren’t getting a tip because you forgot to factor it into your budget!