Do tipped workers pay taxes on tips in 2026?

Under the One Big Beautiful Bill Act signed July 4 2025 qualifying tipped workers pay zero federal income tax on tip income. FICA taxes (Social Security and Medicare) still apply to all tip income. State taxes vary.

Should I tip on the pre-tax or post-tax amount?

Traditional etiquette says tip on the pre-tax subtotal. However most people tip on the total shown which is post-tax. The difference is small — on an $80 pre-tax bill with 8% sales tax the difference between tipping 20% on $80 ($16) versus $86.40 ($17.28) is $1.28.

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Quick Answer

Standard tip percentages: 15% for adequate service, 18% for good service, 20% for excellent service and 25%+ for exceptional service. On an $85 restaurant bill a 20% tip is $17 total or $4.25 per person for a table of 4. In the US tipping 15–20% at restaurants is standard. Under the 2026 OBBBA qualifying tipped workers pay zero federal income tax on tip income.

A tip calculator divides the gratuity across any number of people for any bill amount and tip percentage. Tipping customs vary by service type — restaurants typically expect 15–20% while delivery and rideshare commonly receive 10–20%. Under the 2026 One Big Beautiful Bill Act qualifying tipped workers receive a federal income tax exemption on tip income.