The act of tipping has always been a confusing and awkward part of dining out. Tipping has evolved over the last 20 years. There was a time that you would tip 15% to 20% on the food cost and another percentage on the drinks. This evolved to an across the board tip for the entire bill that went from double the tax to 18% then to 20% and possibly beyond. Recently, a growing trend in the hospitality industry is quietly pushing the boundaries of this tradition, leaving many diners feeling nickel-and-dimed: suggesting a tip percentage based on the total bill after tax.
This small adjustment is, frankly, just plain wrong, and here’s why. While the change in amounts is not a huge number, it just crossed a line for me.
Tipping, at its heart, is meant to be a gratuity for the service provided. Servers, bartenders, and other service staff earn their tips based on the quality of their work and the value of the food and drinks they deliver. The sales tax, however, has absolutely nothing to do with the service. It is a separate charge and in fact is a government levy, pure and simple.
When a restaurant suggests you tip on the post-tax total, they are effectively asking you to pay extra gratuity on money that is never seen by the server or the establishment. It’s a stealthy way to inflate the tip amount without providing any additional service to justify it.
While adding tax to the tipping base might seem like a negligible increase per meal, it’s the principle that matters, and over time, it adds up.
Consider a $100 meal with an 8% sales tax:
Pre-tax total: $100
Post-tax total: $108
If you tip 20%:
On pre-tax: $20.00
On post-tax: $21.60
That’s an extra $1.60 you’re effectively tipping on the government’s portion, not the server’s effort. While $1.60 might seem minor, imagine this across hundreds of customers and millions of transactions. It represents a significant shift in who bears the burden of that extra few dollars.
Restaurants aren’t doing this out of malice, but likely out of a desire to increase tip pools for their staff or slightly boost average tips. In an industry with notoriously thin margins and ongoing debates about fair wages, every dollar counts. Many POS (Point of Sale) systems calculate tip suggestions this way, making it easy for establishments to implement without much thought.
However, convenience and desire for higher tips does not make it right. It’s a practice that lacks transparency and subtly manipulates consumers into paying more for a service they didn’t receive. It creates an awkward situation where diners either feel obligated to follow the flawed suggestion or feel like they’re short-changing the server by calculating on the pre-tax amount.
As consumers, we have the right to tip based on the value of the service, not on government taxation.
Be Aware: Always check the suggested tip percentages and decide for yourself whether to calculate on the pre-tax or post-tax amount.
Tip for Service: If you receive excellent service, feel free to tip generously on the pre-tax amount. If service is subpar, adjust accordingly.
Tipping should be a clear and respectful exchange. Asking diners to subsidize a non-service cost like sales tax under the guise of gratuity is a blurring of lines that ultimately undermines the spirit of tipping itself. What will restaurants include next? Will it be a fee and related tip for overhead charges to run the restaurant? Healthcare fees?