Enter your cash wage, hours worked, and tips earned to see whether your total pay meets the required minimum wage.
Under federal law (the FLSA), employers can pay tipped employees a lower direct cash wage — as low as $2.13 an hour — instead of the full federal minimum wage of $7.25. The difference, up to $5.12 an hour, is called the "tip credit," and it's based on the assumption that tips will make up the gap.
The catch: if an employee's cash wage plus tips doesn't add up to at least the required minimum wage in a given workweek, the employer is legally required to pay the difference. Tips are never allowed to fall short without the employer covering the gap — averaging tips across weeks or months to make the math work isn't permitted.
Several states don't allow a tip credit at all — Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington require tipped employees to be paid the full state minimum wage before tips, with tips counted as extra income on top. If you work in one of those states, set the "cash wage" field to your state's full minimum wage rather than $2.13.
Your employer is required to pay you the difference for that pay period. This is sometimes called a "tip makeup" payment, and it's not optional — federal law requires it.
Under federal rules, an employee generally needs to regularly earn more than $30 a month in tips to be treated as a "tipped employee" eligible for the reduced cash wage. Below that threshold, the full minimum wage applies.
Not always. Many states set a higher required cash wage than the federal $2.13, and seven states don't allow a tip credit at all. Check your state's labor department for the exact figures where you work.
Yes — tips are considered taxable income and must be reported, whether received in cash or through a card.
This calculator provides estimates for informational purposes only and is not legal or tax advice. Tip credit rules vary significantly by state — check with your state labor department or a qualified professional for the rules that apply to you.