Before tax — the food and drink line.
Your receipt almost certainly suggests tips on the discounted total. Many servers are tipped out on the pre-discount amount instead. No authority settles this — pick the one you mean.
Pick your state, or type the exact tax off the receipt below.
The number on your receipt always wins. Type it here and the state average is ignored.
We take it out of the tip base so you don't tip on a tip.
Type what each person ordered. Tax and tip are shared out in proportion — not divided evenly.
Automatic Gratuity: Not a Tip, and It Raises Your Tax
The IRS settled in 2012 that an automatic gratuity is not a tip at all. One consequence almost no calculator models: where the charge is mandatory, it makes your sales tax go up too.
If your party is large enough, the restaurant may add 18% to the bill for you. That line has a name — automatic gratuity, or a mandatory service charge — and legally it is not a tip. This is settled, and it has a consequence on your bill that almost nothing tells you about.
The IRS settled this in 2012
IRS Revenue Ruling 2012-18, in force since 1 January 2014, draws the line: a payment is a tip only if it passes all four of these. Miss one and it is a service charge, which is treated as wages, not as a tip.
You are free not to pay it.
Nobody sets it for you.
The restaurant hasn’t fixed the figure.
You decide the recipient.
An 18% charge added automatically to a table of eight fails the first three. So it is a service charge — the restaurant’s revenue, paid out to staff as wages.
Why that makes your sales tax go up
This is the part that costs money and gets no airtime. A voluntary tip is not taxable. A mandatory service charge often is — which means it is added to the amount your sales tax is calculated on.
California’s tax authority puts it plainly. CDTFA Publication 115: “A mandatory payment designated as a tip, gratuity, or service charge is included in taxable gross receipts.”
California is not alone. New York’s TB-ST-320 and Virginia Code §58.1-3833(C) point the same way.
Service charge: $54.00
Tax is charged on $354, not $300 — so the tax is $31.86 instead of $27.00.
The auto-gratuity cost you an extra $4.86 in tax, on top of the $54.
The calculator above models this. Turn on “A service charge is already on the bill” and it takes the charge out of the tip base — so you are not tipping on top of a tip — and it accounts for the tax the charge attracts.
What to check before you add anything
The failure mode is simple and expensive: the 18% is already on the bill, the card machine then offers you 20% on top, and you tip twice. On a large table that is real money.
So before you add a tip to a big party’s bill, read the itemised lines. If “service charge”, “gratuity” or “service” is already there, the tipping is done. Anything you add is extra, and that is your choice to make deliberately rather than by reflex.