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Are Tips Taxable?

Mandatory tips and gratuities are generally subject to sales tax in California when:

• An amount is automatically added to the bill without first consulting with the customer after the meal is served. Think about group meals, banquets, etc. Generally when serving more than 8 at one table in one ticket.

• The customer and the business agree to a suggest tip amount before the service or event. Think preplanned gathering, education meeting with a meal, conference, etc.

• Menus, brochures, ads, or other materials state that tips, gratuities, or service charges will automatically be Read more

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