Guide
Tipped minimum wage and the tip credit
How the cash wage, the tip credit, and the make-up rule work, and which states allow no tip credit at all.
Under federal law an employer may pay a tipped employee a cash wage of $2.13 an hour and count tips toward the rest of the $7.25 minimum. The difference is the tip credit. If tips do not bring the employee to the full minimum for the workweek, the employer must make up the shortfall.
States vary widely: several require the full state minimum in cash before tips, others set a higher cash wage than federal, and a few follow the federal $2.13. The tipped wage table lists the cash wage and maximum credit for every state, from each state's own page.
A tipped employee is generally one who customarily and regularly receives more than $30 a month in tips. Employers may not keep any portion of tips, and tip pools may not include managers.
Common questions
What is the federal tipped minimum wage?
The federal cash wage for tipped employees is $2.13 an hour, with tips making up the rest of the $7.25 minimum; the employer covers any shortfall.
Which states do not allow a tip credit?
States that require the full minimum wage in cash before tips are marked 'no tip credit' on the tipped wage table; the list comes from each state's labor agency.
Who counts as a tipped employee?
An employee who customarily and regularly receives more than $30 a month in tips under federal rules; some states set their own threshold.