Tips and sales tax are both straightforward percentage-of-a-number calculations. For an amount A and a rate R (as a percent), the added charge is A × R ÷ 100. Once you have that number, add it to the bill for a total, or subtract the tax first if you want to tip on the pre-tax amount.
The standard tip percentages
- 15%: adequate service at a sit-down restaurant.
- 18%: good, common default in many US cities.
- 20%: excellent service, or the norm in major cities.
- 25%: exceptional service or a large group.
Worked example: a $64 restaurant bill
You want to leave 20%. First find 10% by moving the decimal point one place: $6.40. Double it for 20%: $12.80. The total is 64 + 12.80 = $76.80.
For 15%, take 10% ($6.40) plus half of that ($3.20) to get $9.60. For 18%, take 20% ($12.80) and subtract 2% ($1.28, which is one-fifth of the 10% value) to get $11.52.
Worked example: sales tax
A $49.99 purchase in a city with 8.875% sales tax. Convert the rate: 8.875 ÷ 100 = 0.08875. Multiply: 0.08875 × 49.99 = $4.44 (rounded). The total is 49.99 + 4.44 = $54.43.
Should you tip on the pre-tax or post-tax total?
Etiquette guides generally say tip on the pre-tax bill, though many people simply tip on the total for convenience. The difference is small. On a $64 bill with 8% tax, tax is $5.12, and 20% of the tax is about $1.02 — a minor amount, but one that adds up.
Tip and tax reference
| Bill | Rate | Amount | Total |
|---|---|---|---|
| $40.00 | 15% tip | $6.00 | $46.00 |
| $64.00 | 20% tip | $12.80 | $76.80 |
| $49.99 | 8.875% tax | $4.44 | $54.43 |
| $120.00 | 7% tax | $8.40 | $128.40 |
Quick mental tricks
- 10% is just the amount with the decimal moved one place left.
- 5% is half of 10%; 15% is 10% + 5%; 20% is 10% × 2.
- For 18%, use 20% minus 2%.
- Always round to the nearest cent at the end, not mid-calculation.
Splitting the bill and tipping on a card
When several people share a bill, calculate the total including tip and tax first, then divide by the number of diners. For a $180 bill with 20% tip and 8% tax, the total is 180 + 36 + 14.40 = $230.40; split four ways, that is $57.60 each. Doing the percentages once on the whole bill is faster and more accurate than tipping separately at the table.
Many card readers now show suggested tip amounts based on the total, which quietly includes the tax in the tip base. If you prefer to tip on the pre-tax amount, choose the custom option and enter the figure you calculated. Either way, the arithmetic is the same percentage-of-a-number step covered throughout this guide.
Punch the bill and rate into Mode 1 of our percentage calculator to avoid the arithmetic, or read how to calculate the percentage of a number for the underlying method.