Should you tip on the pre-tax or post-tax amount?
Short answer: traditional etiquette is to tip on the pre-tax subtotal. The difference is small — on a $100 meal with 8% tax and an 18% tip, it is $1.44 — so tipping on the total is fine if you prefer to round generously.
Why pre-tax is the norm
The tip rewards the service, and sales tax goes to the government, not the restaurant. Many printed tip suggestions on US receipts are calculated on the subtotal for this reason.
How to back the tax out of a total
If you only have the final total, divide it by (1 + tax rate). Example: $108.00 with 8% tax → $108 ÷ 1.08 = $100.00 subtotal. An 18% tip is then $18.00, not $19.44.
When it does not matter
Outside the US and Canada, menu prices usually already include VAT, so there is nothing to back out. Just tip on the price you pay.
Doing it with Tabwise
Enter your local sales tax rate once and switch on “Tip on the amount before tax”. Tabwise removes the tax from the bill before working out the tip, and remembers the setting for next time.
FAQ
Is it rude to tip on the total including tax?
No. Tipping on the after-tax total is common and simply a little more generous; pre-tax is the traditional etiquette.
How do I remove tax from a total?
Divide the total by 1 plus the tax rate. With 8% tax, $108 ÷ 1.08 = $100 before tax.
Does it matter outside the US?
Rarely. In most countries prices already include tax (VAT), so the menu price is the base.