Tip Income Calculator
Calculate your total income from wages and tips, and see how much you'll owe in taxes.
Your Work Details
Monthly Total
$2,771
Annual Total
$33,250
After Tax/mo
$2,320
Quarterly Tax
$1,352
Income Breakdown
Quarterly Estimated Tax
You should set aside $1,352 each quarter for estimated tax payments (Form 1040-ES). Due dates: April 15, June 15, September 15, January 15.
Disclaimer
All tips are taxable income. Report all cash and credit card tips to your employer. The IRS tracks tip income closely in the service industry.
How Tip Income Is Taxed
All tip income is subject to federal income tax, Social Security tax (6.2%), and Medicare tax (1.45%). Your employer withholds taxes from your hourly wages, but if cash tips exceed withholding, you'll owe the difference when you file. This is why many tipped workers need to make quarterly estimated tax payments.
Tipped Minimum Wage by State
| State | Tipped Minimum | Regular Minimum |
|---|---|---|
| Federal | $2.13 | $7.25 |
| California | $16.50 (no tip credit) | $16.50 |
| New York | $10.65 | $15.00 |
| Texas | $2.13 | $7.25 |
| Florida | $9.98 | $13.00 |
Seven states (CA, OR, WA, NV, MT, MN, AK) have no tip credit — employers must pay full minimum wage before tips.
Tip Pooling and Tip-Out
Tip pooling is legal when done among traditionally tipped employees (servers, bartenders, bussers). In states without a tip credit, back-of-house staff (cooks, dishwashers) may also participate. Employers can never take tips. Typical tip-out: 3-5% of sales to bussers and bartenders.
IRS — Tip Reporting→Frequently Asked Questions
Do I have to report all my tips?
Yes — all tips are taxable income. You must report cash tips of $20 or more per month to your employer. Credit card tips are automatically reported. Under-reporting is common but risky — the IRS uses statistical analysis to flag returns where reported tip income seems low relative to the restaurant's sales.
Should I make estimated tax payments?
If your paycheck withholding doesn't cover your tax on tip income, you may owe underpayment penalties. Quarterly estimated payments (Form 1040-ES) due in April, June, September, and January help you avoid this. A good target: set aside 15-25% of cash tips.
Also use: Hourly to Salary Converter and Overtime Pay Calculator.