Tip Pooling Calculator (2026)
Split a tip pool fairly among tipped employees by hours worked, with a tip-out percentage for support staff. See each person's share, the per-hour rate, and the 2026 federal tip-pooling rules.
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How tip pooling works
A tip pool takes every tip earned during a period — a shift, a day, a week — and divides it among the team instead of letting each server keep what their own tables left. Most pools split in proportion to hours worked: if you worked twice the hours, you get twice the share. Before the split, many houses take a tip-out off the top — a fixed percentage passed to support staff who make the service possible but don't receive tips directly (bussers, food runners, hosts, bartenders).
The arithmetic is simple. With $1,000 in total tips and a 10% tip-out:
| Step | Calculation | Result |
|---|---|---|
| Tip-out to support | $1,000 × 10% | $100.00 |
| Pool for tipped staff | $1,000 − $100 | $900.00 |
| Total hours | 8 + 6 + 6 | 20 hrs |
| Per-hour rate | $900 ÷ 20 | $45.00/hr |
| Maya (8 hrs) | 8 × $45 | $360.00 |
| Jordan (6 hrs) | 6 × $45 | $270.00 |
| Sam (6 hrs) | 6 × $45 | $270.00 |
| Check | $360 + $270 + $270 | $900.00 |
Every dollar is accounted for — the shares always sum exactly to the pool, which is the first thing to verify when a distribution feels off.
The 2026 federal rules, in plain English
Tip pooling is one of the most heavily regulated corners of wage law, and the rules that matter are federal. Under the Department of Labor's 2024 final rule on tip pooling (current for 2026):
- Employers can't touch it. No employer, manager, or supervisor may keep any portion of employees' tips — period.
- Managers are out of the pool. Managers and supervisors may not receive distributions from a mandatory tip pool, even when they work the floor.
- The tip credit draws the line. The federal tipped minimum cash wage is $2.13/hour (FLSA §203(m), unchanged since 1991 and current for 2026). When an employer takes this tip credit, a mandatory tip pool may include only employees who customarily and regularly receive tips. When the employer pays the full minimum wage and takes no tip credit, back-of-house employees may be included.
- Notice is required. Employers must notify tipped employees of the tip-credit provisions before taking the credit.
States can be stricter. California, Washington, Oregon, Nevada, Montana, Minnesota, and Alaska prohibit the tip credit entirely — employers there must pay the full state minimum wage before tips, which changes which pooling arrangements are legal. If your state is on that list, check its labor department's guidance rather than relying on federal rules alone.
Tip-outs: the part that causes the fights
Tip-outs are where most tip disputes start. Common practice is 10–20% of tips (or a percentage of sales) redirected to support roles — but the percentage, the recipients, and whether it's mandatory should all be written down in a house policy. The federal rules above still apply: the employer can't skim the tip-out, and managers can't be on the receiving end. If your house runs a tip-out you didn't agree to or can't see the math for, that's worth a conversation — and the DOL's Wage and Hour Division takes complaints.
Tips and taxes
Everything the calculator shows is gross, pre-tax. Tips are wages under the tax code: employees must report tips (including cash) to the employer, and the employer withholds federal income tax plus Social Security and Medicare. Large establishments also face IRS tip-reporting rules. "Cash tips nobody sees" are still taxable income — the law doesn't have a don't-ask-don't-tell exception.
Data sources: U.S. Department of Labor, Wage and Hour Division — 2024 final rule on tip regulations under the FLSA; FLSA §203(m) tip credit provisions; IRS Publication 531 on tip reporting. Figures current for 2026. This page estimates distributions for planning, not legal or tax advice — "estimates only, not tax advice."
Frequently asked questions
How does tip pooling work?
All tips collected during a period (a shift, a day, a week) go into one pool, which is then divided among the participating employees — most commonly in proportion to hours worked. A 'tip-out' is a slice taken off the top first, usually a fixed percentage, and passed to support staff like bussers, food runners, and bartenders. This calculator does exactly that: total tips → tip-out % → remainder split by hours.
Can my employer take a cut of the tip pool?
No. Under the federal tip-pooling rules (the Department of Labor's 2024 final rule, current for 2026), employers — including managers and supervisors — may not keep any portion of employees' tips, whether or not the employer takes a tip credit. Managers and supervisors also may not share in a mandatory tip pool, even if they serve customers alongside tipped staff.
Can back-of-house staff like cooks be in a tip pool?
Sometimes. The federal rule draws a line based on the tip credit: if the employer takes a tip credit (paying the $2.13/hour federal tipped minimum wage), a mandatory tip pool may only include employees who customarily and regularly receive tips — generally not cooks and dishwashers. If the employer pays the full minimum wage and takes no tip credit, back-of-house staff may be included in a mandatory pool. Several states ban the tip credit entirely, which changes the analysis.
Are tips taxed? Do I have to report them?
Yes — all tips are taxable income, including cash tips. The IRS requires employees to report tips to their employer, and employers withhold income tax, Social Security, and Medicare on reported tips. 'Under the table' cash tips are still legally taxable; this calculator shows gross distributions before any tax withholding.
What if one employee worked twice the hours of another?
In a hours-based split, they get twice the share — that's the point of proportional pooling. With a $900 pool and 20 total hours ($45/hour), an 8-hour server gets $360 and a 4-hour server gets $180. Some houses instead split by points or by role weight (servers 1.0, bartenders 1.2), which this calculator doesn't model — but hours-based is the most common and the fairest baseline.
Estimates only, not tax or financial advice. Figures reflect the 2026 tax year. Verify important decisions with the IRS or a qualified tax professional.