How to calculate tip-out

The three tip-out methods, with numbers

Restaurants use one of three structures. The maths is trivial; the trap is mixing up which base figure the percentage applies to.

• Percentage of tips. You earned $180 in tips and tip out 15% to the support pool: 180 × 0.15 = $27. Net tips $153.
• Percentage of sales. You sold $1,400 and tip out 1% to bussers and 1.5% of bar sales ($400) to the bar: 14 + 6 = $20. This is the common structure in full-service US restaurants, and it means a bad-tipping table still costs you.
• Flat amount. $10 to the barback every shift, whatever you made. Simple, and worst on a slow night.

Typical tip-out percentages

There is no law setting the rate, only custom and the house policy. In US full-service restaurants that tip out on sales, the ranges most often quoted by restaurant operators are roughly 0.5% to 1.5% to bussers, 1% to 1.5% of bar sales to the bar (sometimes of all sales), 0.5% to 1% to food runners, and 0.25% to 0.5% to hosts where hosts are included. Places that tip out on tips instead often land between 10% and 25% of tips in total.

In the UK, tip-out as a personal handover is less common because tips increasingly go through a tronc, a pooled scheme run by a troncmaster, and since the Employment (Allocation of Tips) Act 2023 came into force in October 2024 employers must pass on 100% of tips to staff. If you are in a tronc, what matters for your record is your share as paid, not a deduction you make yourself.

Make the deduction automatic

The mistake people make is not the arithmetic; it is forgetting to do it. A tip log that records gross tips overstates what you earn by whatever you tip out, week after week.

In Tillside the rule lives on the job. Set it to none, a flat amount, a percentage of tips or a percentage of sales, and the tip-out field on every new shift is pre-filled from tonight's tips or sales. If the rule needs sales, the sheet asks for them. On a night that was different, overwrite the number; the app never blocks you from doing that. Net tips, total earnings and your hourly rate all use the resolved amount.

Tip-out and your taxes

In the US, IRS Publication 531 says you report the tips you keep, not the tips you passed on to other employees, so a record of your tip-outs directly lowers the tip income you report. That only works if you wrote the tip-outs down. Our guide to tracking tips for taxes covers what to keep and for how long. This site does not give tax advice; check the current IRS guidance or a tax professional for your situation.