Tipped restaurant and bar workers in Chicago will make $15.80 per hour through raises over the next few years as subminimum wages are banned.
Tipped restaurant and bar workers in Chicago will make $15.80 per hour through raises over the next few years as subminimum wages are banned.
Because tips, even automatic ones, go straight to servers and the restaurant isn’t taxed on that money. Service charges are counted as revenue and the restaurant has to pay taxes on it.
So the state has an interest in encouraging the latter, since it gets taxed twice.
Don’t they charge income taxes on tips?
Yes, but with service charges, the restaurant is taxed as revenue AND the sever is taxed as income.