Should you tip on the pre-tax or the after-tax amount?
Tipping on the pre-tax subtotal or the after-tax total? The difference is the tip rate times the tax: about $1.15 on an $80 bill at 8% tax and 18% tip. A table at several tax rates and how to decide.
Many people tip on the subtotal before tax, since the tax isn’t part of the service. Tipping on the total adds tip rate × tax. On an $80 subtotal with 8% tax, an 18% tip is $14.40 before tax or $15.55 after, a $1.15 difference.
On this page
Most restaurant bills show a subtotal, a tax line, and a total. Which one should the tip be based on? The arithmetic answer is simple, and the difference is smaller than people expect.
The two options
On an $80 subtotal with 8% tax, the total is $86.40. An 18% tip:
- On the subtotal: $80 × 0.18 = $14.40
- On the total: $86.40 × 0.18 = $15.55 (rounded from $15.552)
Try it: 18% tip on the $80 subtotal
Open in calculatorTry it: 18% tip on the $86.40 total
Open in calculatorRemember to add the $6.40 of tax to the first result: $80 + $6.40 + $14.40 = $100.80 paid in total, versus $101.95.
How big is the difference?
Tipping on the total also tips on the tax. The extra is:
extra = tip rate × tax
Where 0.18 × $6.40 = $1.15
On typical bills, it’s about a dollar or two. On a large group bill it’s more: on a $600 subtotal at 8% tax, an 18% tip on the total adds $8.64.
Which to use
- Subtotal. The tax goes to the government, not the restaurant, so many people leave it out. This is also what many tip guides suggest.
- Total. It’s the number at the bottom of the bill, so it’s quicker. The extra is small.
Either is reasonable. Being consistent matters more than which one you choose.
Watch out for these
- Pre-printed tip suggestions. Some receipts show “suggested tips” calculated on the after-tax total, or even after a service charge. Check which line they use.
- Service charges. If the bill already includes a service charge, adding a full tip on top doubles it. See service charge vs tip.
- Splitting. If tax and tip are both on the subtotal, each person’s share is their items × (1 + tax + tip). See splitting a bill with tip.
To work out the tip itself quickly, see how to calculate a tip. For the tax line, see how to calculate sales tax.
Questions
Is it rude to tip on the pre-tax amount?
No. Tipping on the subtotal is a common practice, and the difference is small. If you want a simple rule, tip on whichever number is easier to read on the bill and round up.
What about tipping on a discounted bill or a gift card?
Many people tip on the value of the service before discounts, since the server did the same work. That’s a personal choice, not a rule.
The calculator links in this guide are checked against the PercentSwift calculator every time the site is built. How we calculate explains the rounding rules. If you spot a mistake, email hello@percentswift.com.
