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Wisconsin: Tips on Taxing Tips

  • Feb 19, 2014 | Gail Cole

 Are tips in your state subject to sales tax?

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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Wisconsin State Rates

photo credit: zoomar via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.