How to Calculate a Tip Before or After Tax
Tipping is a normal part of everyday business in service industries, but people often disagree about the amount of tips and the balance upon which the tip is calculated. The Emily Post Institute provides general tipping guidelines for common services, such as dining and travel, and identifies a rate of 15 to 20 percent as acceptable for dine-in restaurants. Whether or not you calculate the tip on the total amount of the bill before sales tax or after sales tax is a personal choice, and no hard and fast rule exists. However, you can use a tip-calculating trick to determine a tip in the appropriate range without using a calculator.
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Instructions
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1
Locate the subtotal on the ticket. The subtotal should include the cost of your entire purchase before taxes. If the ticket does not provide a subtotal before taxes, then subtract the amount of sales tax from the total bill to determine the pretax amount.
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2
Multiply the after tax or pretax amount by 10 percent. For example, if your after-tax bill is $28, then $28 times .10 equals $2.80.
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3
Round up the calculated amount in Step 2 for simplicity. For example, $2.80 would be rounded up to $3.
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4
Divide the rounded amount by two. For example, $3 divided by two equals $1.50.
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Add the amount calculated in Step 4 to the rounded amount to determine the amount of your tip. For example, $1.50 plus $3 equals $4.50. This simplified calculation yields an actual tip percentage of 16 percent due to rounding.
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Repeat this process for the pretax amount on the bill if you'd like to compare the two tipping amounts. Choose the amount you wish to tip.
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Tips & Warnings
For an even more simplified calculation, round up the amount in Step 4 to a whole dollar. In this example, the tip would be $5 or 18 percent of the bill.
You can purchase a tip card that lists the amount of the tip based on percentage of tip and the total you select. The tip card is the same size as a credit card and fits easily into your wallet.
References
- Photo Credit Restaurant image by René Schulz from Fotolia.com
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Comments
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dubbleenerd
Mar 29, 2010
an easier method is to use the sales tax amount on your bill (you should know the sales tax percentage applied in your state, it is typically between 6-8%). If it is 6% for example, just multiply the applied tax amount by 3 for an 18% tip.
