For you / Baristas

By NorseHorse. Updated October 16, 2026. General information, not legal or tax advice.

How baristas get paid

Most baristas are W-2 employees with an hourly wage plus a share of tips. Many cafes pay at least the full minimum wage and treat tips as extra. Others, where the law allows, use the tip credit: federal law treats you as a tipped employee once you customarily and regularly get more than $30 a month in tips, and then the employer can pay as little as $2.13 an hour in cash as long as wage plus tips reaches $7.25. Several states, including Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington, require the full state minimum wage before tips. Check yours on the tipped minimum wage page.

The jar, the screen and the pool

Tips come in two ways: cash in the jar and tips added on the card reader. Most shops pool both and divide them by hours worked, weekly or each pay period, and pay the card share (and often the cash share) through payroll.

Who can be in that pool depends on how you're paid. If the shop takes a tip credit, a mandatory pool can include only employees who customarily and regularly receive tips. If it pays everyone the full minimum wage and takes no tip credit, the pool can also include staff who don't usually get tips. In both cases, employers, managers and supervisors can't take tips from the pool, and the employer can't keep any part of your tips.

If your shop pays card tips, it may take out the card company's fee on them, but no more than the actual fee.

Splitting by hours is simple math that's easy to get wrong when someone's hours are missing. Check your share with the tip pool calculator, and see what a week actually paid per hour with the hourly rate calculator.

Your 2026 taxes as a barista

Tips are taxable income, whether they come from the jar, the screen or the pool. When your tips at one job reach $20 or more in a month, the IRS says to report them to your employer by the 10th of the next month. In a pool, you report only what you receive and keep, meaning your share. When the shop runs tips through payroll it already knows the amount, but it's still worth checking that your stub matches your share. Your employer uses the tips it has on record to withhold Social Security, Medicare and income tax.

No Tax on Tips

Baristas are on the Treasury's list of tipped occupations. They fall under code 107, fast food and counter workers, which names barista, ice cream server and cafeteria server as examples. That means your qualified tips can count toward the federal tips deduction: up to $25,000 a year for 2025 through 2028, phasing out once modified adjusted gross income passes $150,000 ($300,000 joint).

Three details matter for baristas:

• The tips have to be on your W-2. For 2026 your W-2 shows reported cash tips in box 12 with code TP and your occupation code in box 14b. If box 14b shows only 000, the IRS says those tips aren't qualified. Tips that never made it onto the W-2 only count if you report them yourself on Form 4137.
• Pool money counts. Money you get through a tip pool or tip share can be a qualified tip. Pool money paid to a manager or supervisor isn't.
• It's income tax only. Social Security and Medicare still apply to your tips.

Read the No Tax on Tips guide and W-2 box 12 code TP, or estimate your savings with the No Tax on Tips calculator. If this is your first job, filing taxes for the first time covers the rest.

What to track

• Your hours each shift, since your pool share usually depends on them.
• Your share of the pool each week or pay period, and the pool total if the shop posts it.
• Card tips and cash tips separately, if they're split separately.
• Each pay stub's tip line, to check against your record.
• Each shop separately, if you work at two.

Over a year, a few missing hours in the pool sheet add up. A record you kept yourself is what you bring to a manager when the numbers look off.

How Cashout helps

Cashout is free, works offline, and doesn't need an account. These work on both Android and iPhone unless noted.

• Shifts. Log hours and your hourly rate, then add your tip share as Cash Tips or Card Tips when you get it. Your Effective Rate shows wage plus tips per hour. See tip tracking.
• Tip Split. Enter the pool and each person's points to see every share, then share the result as text or save the crew as a template. It splits by points only. To split by hours, enter each person's hours as their points: 30 hours gets twice the share of 15. See Tip Split.
• Paycheck Check. Enter a pay stub and Cashout compares it with the shifts you logged for that period. The current iPhone version tends to flag tipped workers' stubs as a mismatch even when they're right, so it's most useful on Android today. See Paycheck Check.
• Pay period forecast. Projects your next check from shifts worked and scheduled; on Android it shows a likely range. On iPhone it's called Paycheck Predictor, and the current version assumes you're paid every two weeks.
• Widgets. Daily Earnings, Weekly Total, Tax Savings and Next Shift on your home screen. On iPhone, the current version's widgets need iOS 26.2 or later. See widgets.
• Taxes. Federal, Social Security and Medicare, and state tax estimates, with a Tax Savings jar. The No Tax on Tips deduction isn't in the app yet.

What it doesn't do: Cashout doesn't connect to Square, Toast or your shop's payroll, so it can't see the pool. Your numbers are what you enter.

Common questions

Are barista tips covered by No Tax on Tips?

Yes. Baristas are named as an example under code 107. Your tips still need to be reported on your W-2 (or on Form 4137), and the deduction lowers income tax only.

Can my shift supervisor take from the tip jar?

Federal rules bar managers and supervisors from taking tips from a pool. Under the federal rule, a manager or supervisor is an employee whose duties match those of an executive employee, so whether a shift lead counts depends on what they actually do. Ask your state labor department or the Department of Labor if you think the pool is being split wrong.

Tips come in my paycheck. Do I still need to report them?

The IRS rule covers all your tips: when they total $20 or more in a month at one job, report them to your employer by the 10th of the next month. If the shop pays the pool through payroll, it may already have the amount on record, so ask how it handles reporting. Either way, keep your own record.

Track it all with Cashout. Shifts, tips, unpaid breaks, taxes, and mileage, logged in seconds. iPhone · Android