A State-by-State Look at Wages & Tipping

Toast's Quarterly Restaurant Trends Report was just released, and it offers a wealth of information on wages and tipping in states across the country. 

Currently, the federal minimum wage for tipped employees stands at $2.13 per hour as long as the “amount combined with the tips received at least equals the federal minimum wage,” according to the Department of Labor. Known as a “tip credit,” the maximum tip credit against the federal minimum wage is currently $5.12 to meet the federal Basic Combined Cash & Tip Minimum Wage Rate of $7.25 per hour.

Only seven states currently require employers to pay tipped employees full state minimum wage before tips:

  • Alaska
  • California
  • Minnesota
  • Montana 
  • Nevada
  • Oregon 
  • Washington

However, several other state and local governments have also started to pass laws increasing the minimum wage for tipped workers. Here are some examples:

  • Chicago: In 2023, the One Fair Wage Ordinance was passed, which will phase out subminimum wages for tipped workers and gradually raise it to match the full minimum wage over the next five years. 
  • Washington, D.C.: In May 2023, the district started fading out the tipped minimum wage, where the base was $6. It is currently $8 and will rise to $20 in July 2024. 
  • Florida: Starting in 2023, the state is gradually raising the tipped minimum wage from $8.98 to $13.98.

And in California, where tipped employees already receive full state minimum wage, most fast food workers received a raise in minimum wage to $20, which went into effect in April 2024. To be eligible, the restaurant must offer limited or no tableservice, have 60 or more establishments nationwide, and primarily sell food and beveragesfor immediate consumption.

To determine how these local laws are affecting restaurants in the U.S., Toast analyzed both hourly wages and tips per hour for workers from January 1, 2022, to March 31, 2024. The included job titles included the words “server,” “bartender,” or “wait” at full-service Toast restaurants utilizing Toast Payroll & Team Management. Salaried, overtime, and bonus wages are not included, and paid time off is not included. Servers and bartenders included in the analysis worked a minimum of five hours in the payroll period and received tips greater than zero.

Rising Restaurant Wages

rising restaurant wages
View the interactive graph here. (Courtesy of Toast)

Some takeaways from the chart above:

  • Over the two-year period, Chicago servers and bartenders saw a slight rise in the median hourly base wage, excluding tips, from $9 to $9.48 in Q1 2024.
  • Washington, D.C., saw a much larger increase with servers and bartenders going from $5.05 to $8—a 58% increase in just two years.
  • The national median also saw a slight increase from $6.74 to $7.38.  


The Changing Tipping Landscape in Restaurants

restaurant tips
View the interactive graph here.​​​​ (Courtesy of Toast)

Tipping over the last few years tells a less straightforward story than the overall rising of wages. Some guests are experiencing tip fatigue, and some are confused about whether or not they should tip workers following thes elimination of the tip credit in many states. Restaurants implementing service charges to help offset the cost of paying employees more per hour further adds to the confusion.

Some takeaways from the chart above:

  • The national tips per hour average rose from $19.24 to $21.63 over the two-year period.
  • All of the states measured show a tips per hour average higher than the national mean.
  • Washington, D.C. had a bit of a rollercoaster ride over the last years, starting at $25.72, dipping to $21.74 in Q2 2023, and then rising back up to $27.72 in Q1 2024.
  • Los Angeles currently has the highest wages at $16.78, but this doesn't seem to be affecting tips, which rose from $21.16 to $29.66 over two years.

While tips per hour have increased, the total average tip has dipped, with the national average going from $19.8 to $19.4.

How do overall average tips compare across the states? See the chart below for a sense of gratuity across the U.S.

restaurant tipping by state
View the interactive chart here. (Courtesy of Toast)


  • Delaware is currently the most generous state, with an average total tipping percentage of 22.1%. The state also has the highest tips for full-service restaurants, tipping an average of 22.5%, and quick-service restaurants, averaging 19.1%.
  • Tied for second-best average total tipping percentages at 20.7% are Indiana, New Hampshire, and West Virginia.
  • California tips the least of all states, with an average total tipping percentage of 17.4%.


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