Feb 7th
Why are suggested tips in restaurants (15%, 18%, 21%) based on the total including the tax?
- Posted in Taxes Q&A
- Comments 5
My bill is with the restaurant, not the government, so why does the restaurant include the total + the tax when they calculate the suggested tip? Since tax is different in every state (or even different counties) and some states don’t have a sales tax, this means tips are supposed to be higher or lower in every state. This is stupid, so why do restaurants do it?
Just ignore all that and tip what you think the service is worth, realizing your server probably is being taxed based on between 12-15% of estimated tips. Anything over 15% for good service is fair.
That’s NOT supposed to be including the tax, considering taxation is done by the govt. and restaurants only collect for the govt. But, generous people like my husband have spoiled the waiters and restaurants by tipping too much!
I guess it just depends on what state you’re in. But if you’re that concerned about it, just do a percentage of the bill beofre the tax was added, usually 15%-20% is the standard. That way, you’re not basing the tip off of tax.
I believe the suggested tips are calculated based on the tax, not the total plus the tax.
Let’s say your meal was $20. Then your tax should be $1.65 if your tax was 8.25% (in Los Angeles).
Then 15% tip = $3.30 + $20 = $23.30 total
18% tip = $3.60 + $20 = $23.60 total
20% tip = $4.00 + $20 = $24.00 total
I’m not sure how states with no tax would have suggested tip… they would probably use the food total to calculate the tax.
You do NOT include tax in the tip. Deduct the tax and tip on the total food bill whatever is appropriate.