Investigating how your friends and family tip can be fascinating and revealing. You may discover that your uncle tips “a dollar per person” whether he’s at the local coffee shop or a four-star restaurant, and that your penny pinching great-aunt always tips the boy who carries her groceries to her car. Ask for a tip on tipping, and you’re sure to accumulate several (it’s the kind of thing that invokes strong opinions). But answer this: Are tips taxable?
The Wisconsin Department of Revenue has taken it upon itself to clarify this vexing question in When are Tips and Gratuities Subject to Sales Tax? It explains when tips are subject to Wisconsin sales tax:
- Mandatory tips or gratuities are subject to sales tax; and
- Discretionary tips or gratuities are not.
It makes sense, really. If your tip is included in your bill (as is often the case with large parties), it’s taxable. If it isn’t, it isn’t.
Craving additional tips on tipping? Emily Post can set you straight.
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