Sales - Tips and Other Charges
Tips, other service charges, or rental charges may be taxable.
Voluntary Tips
Tips that a customer voluntarily leaves or adds to a credit card receipt are not taxable.
Tips Added by Seller
Tips or service charges a seller adds to the bill are taxable, even if the tip amount is given to employees. The table below shows which taxes apply.
| Tips or Service Charges for These Items: | Are Subject to These Taxes: |
|---|---|
| Food only |
|
| Liquor only |
|
| Food and liquor combined (see note below) |
|
Note: If you can divide the tip or service charge to show what portion is for food versus liquor, do not collect the 2.5% liquor tax on the food portion. You must keep documentation showing how you determined the tax.
Other Charges
Other charges added to a customer’s bill are considered part of the sales price. If the item or service is taxable, the additional charges are taxable.
Examples include but are not limited to:
- Cover charges (for food, drinks, entertainment, dancing, admissions, etc.)
- Delivery charges
- Equipment rentals (decorations, tables, chairs, audiovisual equipment, etc.)
- Parking fees for customers or employees
- Noncash fees or fees to use a credit or debit card
- Dine in or take out fees
- Charges for employee fair wages, employee benefits, or employee wellness
- Surcharges (food, fuel, etc.)
For more information, see Sales Price.
The following charges are not taxable when separately stated:
- Coat check fees
- Corkage fees
- Returnable container fees (pie tin, or other reusable food or beverage container)
- Space rental (meeting room, ballrooms, halls that are not in a recreational area or for lodging)