Tipped Minimum Wage Calculator
Updated November 2026 · Free · No sign-up
Calculate tipped minimum wage — the cash wage + tip credit system: whether your tips actually bring you to the legal floor, the employer make-up duty when they don’t, and the states that abolished tip credits.
Quick answer: Federal system: employers may pay a $2.13 cash wage if tips bring you to $7.25 (a $5.12 tip credit). If a week’s tips fall short, the employer must pay the difference. Seven states (CA, WA, OR, NV, MN, MT, AK) require full minimum wage BEFORE tips.
How the Tip Credit Works
Cash wage + tips must average ≥ the applicable minimum wage each workweek. The employer’s tip credit = minimum − cash wage (federally max $5.12). Shortfall weeks trigger the make-up duty: the employer tops up — automatically, not on request. States split three ways:
| Model | States (examples) | Cash wage |
|---|---|---|
| Federal $2.13 | TX, GA, NC, VA... | $2.13 + credit to $7.25 |
| Higher tipped floors | NY (~$10+), FL ($9.98+), CO, AZ, IL... | State-set cash wages, smaller credits |
| No tip credit | CA, WA, OR, NV, MN, MT, AK (+ Chicago/DC phasing out) | Full minimum BEFORE tips — tips are pure addition |
Worked Examples
Example 1 — normal week. 35 hrs at $2.13 + $280 tips: effective $10.13/hr ≥ $7.25 ✓ — legal; the employer used the full credit.
Example 2 — the slow week. 35 hrs, $150 tips: effective $6.42 — the employer owes $29.05 make-up that week. Chronic unpaid make-ups are among the most common wage violations in hospitality.
Example 3 — the 80/20 rule. Side-work (rolling silverware, cleaning) beyond 20% of time — or 30+ continuous minutes — must pay FULL minimum, not the tipped wage; track your non-tipped hours.
Tipped Overtime (Where Everyone Gets Cheated)
OT for tipped staff computes on the FULL minimum wage, not the cash wage: federally 1.5 × $7.25 = $10.88, minus the $5.12 credit → cash OT rate $5.76, never $3.20 (1.5 × 2.13). Payrolls that multiply the cash wage shortchange every OT hour — a back pay classic.
Your Weekly Self-Audit
Track hours and tips weekly (not monthly — the test is per workweek), verify make-ups on slow weeks, check deductions (walkouts/breakage can’t drop you below minimum; pool shares count toward your average but manager cuts never do), and keep your own records — tip-credit cases are won on employee logs.
Frequently Asked Questions
What is the tipped minimum wage?
Federally: a $2.13 cash wage where tips fill the gap to $7.25 (the $5.12 tip credit) — but 20+ states set higher cash wages, and seven require full minimum before tips.
What happens when tips don’t reach minimum wage?
The employer MUST make up the difference for that workweek automatically — unpaid make-ups are recoverable wage violations.
Which states have no tip credit?
California, Washington, Oregon, Nevada, Minnesota, Montana, Alaska — full minimum wage plus tips on top (Chicago and DC are phasing credits out).
How is overtime calculated for tipped employees?
On the FULL minimum wage (1.5 × $7.25 = $10.88 federally) minus the tip credit → $5.76 cash — never 1.5 × the $2.13 cash wage.
Does side work pay the tipped wage?
Only within limits — over 20% of the week or 30+ continuous minutes of non-tipped side work must pay the full minimum (the 80/20 rule).
✓ Formula verified • Last updated: November 3, 2026