Short answer: Montana does not allow a tip credit. Tipped workers must be paid the full state minimum wage of $10.85 an hour before tips, and they keep their tips on top.
Montana tipped wage at a glance
| Montana | |
|---|---|
| Minimum wage | $10.85 an hour |
| Cash wage for tipped workers | $10.85 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: $11.20.
Local rates and exceptions
No tip credit. Businesses not covered by the FLSA with gross sales of $110,000 or less may pay $4.00.
Tip pools and who keeps the tips
The state labour department says tips and gratuities belong to the employee and cannot be used to make up any part of the required wage. A mandatory service charge in a food, beverage or lodging business must be distributed directly to eligible non-management employees under a tip pool agreement. The pages checked do not set other pooling rules.
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
Montana law counts tips and gratuities of any kind as wages (39-3-201 MCA), so they belong to you and fall under the state's pay timing rules: earned wages cannot be held back more than 10 business days after they are due.
Can card fees come out of tips?
The Montana labour department's guide does not address card processing fees on tips, and tells you to ask its Investigation Section. Federal rules only let an employer deduct the actual fee on that card tip.
Service charges
A service charge is a fixed charge a food, beverage or lodging business adds in place of a tip. The employer must pass it on to eligible non-management staff under a tip pool agreement (contracts entered on or after 14 April 1995).
Income tax on tips in Montana
Montana taxes tips. Its old subtraction for tips earned by service industry workers was repealed under the 2021 tax simplification law, and state taxable income starts from federal taxable income. Whether Montana passes the federal 2025 tips deduction through was not confirmed on a Revenue Department page.
Other rules
- Your employer cannot make you pay for damages, mistakes or shortages, or hold your final check if you do not return uniforms or equipment.
- Wage claims must be filed within 180 days of the unpaid wages being due.
The agency in charge is the Montana Department of Labor and Industry, Employment Relations Division.
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)
- Montana DLI, State Minimum Wage
- Wage and Hour Labor Law Reference Guide
- Wage and Hour FAQs
- Montana Tax Simplification Resource Hub
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 Montana in 2026?
Montana does not allow a tip credit. Tipped workers must be paid the full state minimum wage of $10.85 an hour before tips, and they keep their tips on top.
Does Montana 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 Montana minimum wage going up?
1 Jan 2027: $11.20.
Can my employer take card fees out of my tips in Montana?
The Montana labour department's guide does not address card processing fees on tips, and tells you to ask its Investigation Section. Federal rules only let an employer deduct the actual fee on that card tip.
Does Montana tax tips?
Montana taxes tips. Its old subtraction for tips earned by service industry workers was repealed under the 2021 tax simplification law, and state taxable income starts from federal taxable income. Whether Montana passes the federal 2025 tips deduction through was not confirmed on a Revenue Department page.
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