Short answer: California does not allow a tip credit. Tipped workers must be paid the full state minimum wage of $16.90 an hour before tips, and they keep their tips on top.
California tipped wage at a glance
| California | |
|---|---|
| Minimum wage | $16.90 an hour |
| Cash wage for tipped workers | $16.90 an hour |
| Maximum tip credit | None: no tip credit allowed |
| Who counts as a tipped employee | Federal rule: someone who regularly gets more than $30 a month in tips |
| In force since | 1 January 2026 |
The federal tipped minimum is $2.13 an hour with a $5.12 tip credit toward the $7.25 federal minimum wage. Where a state sets a higher figure, the higher one applies.
Upcoming changes
1 Jan 2027: $17.40 (certified by Dept of Finance 31 Jul 2026).
Local rates and exceptions
No tip credit. Many cities and counties set higher local minimums (for example San Francisco, Los Angeles, Berkeley). Fast food workers covered by the state fast food rule get $20.00.
Tip pools and who keeps the tips
Employers can require tip pools among staff, but owners, managers and supervisors cannot take a share, even if they serve tables. The pool should be split fairly among employees who serve the customer.
Federal FLSA: employers, managers and supervisors may not keep any part of employees' tips. A mandatory tip pool may include only customarily tipped staff when a tip credit is taken; if the full minimum wage is paid, back-of-house staff may share the pool.
To share a pool fairly by hours or points, use the tip split calculator. To work out what a server owes support staff, use the tip-out calculator.
Who owns the tips
Tips belong to the employee. Under Labor Code section 351 your employer cannot take any part of your tips, and tips paid by card are due by the next regular payday after the customer authorized the payment.
Can card fees come out of tips?
No. If customers tip by card, your employer must pay you the full tip shown on the card slip and cannot take out credit card processing fees.
Service charges
A mandatory service charge is not automatically a tip. If customers would reasonably believe the charge is a tip for staff, a court has held it can count as a gratuity that must go to employees. Ask your employer how the charge is shared.
Income tax on tips in California
California taxes tips as income. It has not adopted the federal 2025 'no tax on tips' deduction as far as I could confirm. A bill to do so for tax years 2026 to 2028, SB 984, was moving through the Legislature in 2026, but I could not confirm that it became law.
Other rules
- Fast food workers covered by the state fast food rules earn a higher statewide rate of $20 an hour.
- The Labor Commissioner can investigate and cite employers who take or withhold tips.
The agency in charge is the California Labor Commissioner's Office (DLSE).
Tips and federal income tax
From 2025 to 2028, up to $25,000 of qualified tips a year can be deducted from federal taxable income. See the no tax on tips calculator for who qualifies and what it saves.
Taking tips by card
Customers carry less cash. A personal QR code lets them tip you by card, Apple Pay or Google Pay from their own phone, with no app to install. See QR code tip jars by job.
Sources
- US DOL WHD, Minimum Wages for Tipped Employees (revised 1 Jul 2026)
- US DOL WHD, State Minimum Wage Laws (updated 1 Jul 2026)
- California DIR news release 2026-66, 2027 minimum wage
- Governor Newsom announces California will raise statewide minimum wage
- Publication 115, Mandatory Charges
- SB 984 No Tax on Tips conformity
Checked in October 2026 against the sources above. Wage rates change, often on 1 January and 1 July; check the state labor department before relying on a figure. This is general information, not legal advice.
Common questions
What is the tipped minimum wage in California in 2026?
California does not allow a tip credit. Tipped workers must be paid the full state minimum wage of $16.90 an hour before tips, and they keep their tips on top.
Does California allow a tip credit?
No. Tipped workers must be paid the full minimum wage before tips.
What happens if my tips do not make up the minimum wage?
When an employer pays a tipped cash wage, it must make up any shortfall so that your cash wage plus tips is at least the full minimum wage for the hours you worked.
Can my employer or manager keep part of my tips?
No. Under federal law, employers, managers and supervisors may not keep any part of employees’ tips, including through a tip pool.
Is the California minimum wage going up?
1 Jan 2027: $17.40 (certified by Dept of Finance 31 Jul 2026).
Can my employer take card fees out of my tips in California?
No. If customers tip by card, your employer must pay you the full tip shown on the card slip and cannot take out credit card processing fees.
Does California tax tips?
California taxes tips as income. It has not adopted the federal 2025 'no tax on tips' deduction as far as I could confirm. A bill to do so for tax years 2026 to 2028, SB 984, was moving through the Legislature in 2026, but I could not confirm that it became law.
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