When to Calculate Your Tip: Total Before or After Fees and Taxes

When dining out, calculating a tip can be a bit confusing, especially with various fees and taxes added to the bill. In general, the recommended practice is to base your tip on the total before taxes and fees. However, there are times and places where including taxes in your calculation might make sense. This article explores the nuances of tip calculation and provides clarity on when to use which total.

Tip Calculation Best Practices

Typically, you estimate the cost of the meal, haircuts, taxi rides, furniture delivery, or clothing, and add 1/4 to 1/3 to the final bill. A rule of thumb is to tip 20% if your server was exceptional and reduce it to 10-12% if they were less than satisfactory. Additionally, no tip should be less than 8%, and you might need to add tax on top of that.

Importance of Service Quality

Tips are based on the quality of service, not the quality of the food. It's important to understand that the food is prepared by the kitchen, and the server is responsible for the service. If a meal is served as a hot mess from the kitchen, it’s considered sub-par service, and you can tip accordingly. However, if the server provided excellent service, ensure you tip generously to acknowledge their efforts.

Trending Issues in Tip Calculation

Recently, there has been a trend where tip calculations often include taxes, which is incorrect. Tips are meant to be paid before taxes are applied. According to recent practices, I now see this deception more often and have started correcting the tip, either through mentioning it in my restaurant reviews or calling it out publicly.

Many believe that including taxes in the tip calculation is a tactic to increase revenue. However, this practice can erode customer trust and can signal hidden charges or dishonesty. For instance, in New York City, the sales tax is 8.25%, and I double the tax for my tipping, making it 16.5% of the bill. Despite this, I believe that taxes should not be included in the tip calculation because the state and city keep the tax revenue, not the restaurant and staff.

The Case for Excluding Taxes from Tip Calculation

One might argue that including taxes in the tip calculation is reasonable, given that the city and state—that implement the tax on restaurant dining also benefit from its revenue. However, considering that the restaurant and staff do not retain this money, it's more ethical to exclude it from the tip calculation. A fair tip should reflect the service provided directly by the server and not be influenced by factors like taxes or city revenue.

Mathematical Challenges or Deception?

Sometimes, I suspect that the restaurant is miscalculating the tip due to a lack of mathematical competence. But now, I believe that the deceptiveness behind including taxes in the tip calculation is deliberate. When I encounter this, I address it in restaurant reviews to help maintain transparency in service charges and encourage honest tip practices.

Another unethical practice that correlates with incorrect tip calculations is mixing cheap liquor with branded liquor bottles. This has led me to avoid returning to such establishments because they cannot be trusted.

Conclusion

The tip calculation process should be straightforward. Unless there are specific local customs, always base your tip on the total before taxes and fees. This practice ensures fairness, builds trust, and acknowledges the quality of the service you receive. When you encounter practices that skew the tipping process, it's your right to challenge them and ensure clarity and honesty in the payment process.