How to Figure Credit Card Tips & Taxes in a Restaurant

Calculating your tip depends on your familiarity with proper tipping etiquette.

Besides paying taxes on the menu price at restaurants, you are also expected to leave a tip for your server. Trying to figure out your total beforehand can be a little confusing, so most people just wait for the check at the end of the meal and decide on a tip based on the quality of service. But if you are a hard charger and want to see what goes into calculating your total restaurant bill, it only takes a moment to learn the basics of restaurant taxing and tipping.

Instructions

1. Determine what your state sales tax is, and whether or not your state has a separate food tax (See Resource section for a link to a state tax chart). For example, Tennessee charges a 5.5-percent food tax although its sales tax is 7 percent for all other goods; Massachusetts charges 6.25-percent sales tax on food and all other merchandise; and Oregon does not charge tax for food.

2. Calculate your tax by adding up everything on your bill. Once you get the grand total, then multiply by your state's food or sales tax amount, whichever is applicable. For example, if you determine your bill is $5.99 for some soup and salad, and your state has a 5-percent sales tax, you would multiply 5.99 x 0.05 = 0.2995, or about 30 cents. So your total bill would be $6.30.

3. Figure leaving 15 percent for a waiter. If he gave you exceptionally good service, you can leave him 20 percent, and if he gave you exceptionally bad service, you can leave him 10 percent or less. If you felt the service was so bad the waiter does not deserve a tip, then you do not have to leave one (and you should probably talk to a manager).

4. Calculate the tip by taking your total bill and multiplying it by 15 percent. Using the example above, your soup and salad bill of $6.30 would be: 6.30 x .15 = 0.945, or about 96 cents.

Tips & Warnings

• If you are a generous tipper and plan on leaving a 20-percent tip, you can forget the calculations and just figure on leaving $2 for every $10 you spent on the bill.

• There is some debate about whether a tip should be based on the pre-tax bill or after the tax has been added to the check. But whichever you decide is correct, remember that the final decision ultimately rests with the customer.

References

• Get Rich Slowly: Basic Tips on Tipping: How Much and To Whom?
• The Straight Dope: Should a Restaurant Tip be Based on the Check Before or After Tax?
• Basic Mathematics: How to Calculate Sales Tax

Resources

• Federation of Tax Administrators: State Sales Tax Rates and Food & Drug Exemptions