“Well they do work on tips.” — Seinfeld, Season 6, Episode 8
What percentage of a waiter and waitress’s income comes from tips and what comes from salary? The calculation isn’t straightforward for several reasons.
The IRS only asks for taxable income rather than splitting between tips and wages.
There’s also underreporting for tip income, either on purpose or unintentionally, because a lot of tips come as loose cash. Square estimated tipping percentage by state a while back based on people using their service, but that comes with the caveat that it only represents business that use square, and it only counted credit card transactions.But hey, we can at least try to figure out the split.
One place to start might be the PayScale Restaurant Report, which surveyed restaurant workers. Here’s what they calculated for percentage of income that comes from tips, by job. Waiters and waitresses reported on average 62 percent.
There are some things we need to consider though. For example, a dollar is worth more and less in various states. That is, it costs more to live in some states than…
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