For you / Valets

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

How valets get paid

You might work for the hotel, restaurant or venue directly, or for a parking company it hires. Either way your pay is usually an hourly wage plus the tips drivers hand you when you bring the car around. Some stands let each valet keep what they're handed; others pool the night's tips and split them across the crew.

If your wage is low, check whether your employer is taking a tip credit. Under federal law, an employer can pay a tipped employee (someone who customarily and regularly gets more than $30 a month in tips) a cash wage as low as $2.13 an hour and count up to $5.12 an hour of tips toward the $7.25 minimum. It has to give you certain information before it does, and if your wage plus tips falls short of the minimum in a workweek, it has to make up the difference. Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington don't allow a tip credit at all. Your state's rate is on the tipped minimum wage page.

The valet fee isn't your tip

When a customer has to pay a parking or valet charge, that's a charge for service, not a tip, under federal wage law. It also isn't a qualified tip for the federal tax deduction, even if the business passes part of it to you. A tip is what the customer decides to give on top.

Stand tip pools

• Your employer can't keep any part of your tips, for any purpose.
• Managers and supervisors can't receive tips from a pool. Whether a lead or captain counts as one depends on their actual duties under the Department of Labor's definition.
• If your employer takes a tip credit, a required pool can include only employees who customarily and regularly receive tips.

Splitting a stand's tips by hours? The tip pool calculator does it to the cent.

2026 taxes on valet tips

Cash tips are income. All tips you receive are subject to federal income tax. When you get $20 or more in a month at one job, you report them to your employer by the 10th of the next month, including tips you get from other valets through a pool. The IRS also tells tipped employees to keep a daily tip record. Tips you report are generally subject to income tax withholding and Social Security and Medicare tax, taken from your paycheck. If you don't report them, you figure the Social Security and Medicare tax yourself on Form 4137 and may owe a penalty of 50 percent of that tax. See reporting tips to your employer.

The federal tips deduction (No Tax on Tips) covers valets. It applies only to occupations on the Treasury list of jobs that customarily and regularly received tips on or before December 31, 2024, and "Parking and valet attendants" are on it as code 801, with valet parkers and parking garage attendants as examples.

• You can deduct up to $25,000 of qualified tips a year, for 2025 through 2028, with a phase-out once modified adjusted gross income passes $150,000 ($300,000 joint).
• For 2026, a tip counts only if it's on your W-2 in box 12 code TP (the cash tips you reported to your employer) or on Form 4137. That matters for valets more than most, because cash you never report or put on Form 4137 can't be deducted. See W-2 box 12 code TP and Form 4137.
• It lowers federal income tax only. Social Security and Medicare still apply.

If an event company pays you as an independent contractor on a Form 1099 instead of a W-2, different rules apply: for 2026 only tips the payer reports on your 1099 count toward the deduction, the deduction can't exceed your net profit, and you owe self-employment tax. A business has to send a 1099-NEC only when it pays you $2,000 or more in 2026. See No Tax on Tips when you're self-employed.

Driving your own car to the job doesn't help on a W-2: most employees can't deduct unreimbursed car expenses.

What to track

• Cash tips at the end of every shift, before and after any pool.
• Hours and your hourly wage.
• Which venue or stand you worked, if you rotate.
• What you reported to your employer each month.
• For events: the date, the venue, and who paid you, so you know whether a W-2 or a 1099 is coming.

Prefer paper? Print the tip log template.

How Cashout helps

Cashout is free on Android and iPhone, works offline, and doesn't need an account. Everything below works on both unless it says otherwise.

• Shifts. Log hours, hourly rate, Cash Tips, what you put into a pool as Tip Out, and the tips you reported. Set up each venue as its own job. On Android you can tap Start shift when you clock in, from the app or a Quick Settings tile, and add tips when you end it; the shift timer is coming to iPhone. See the shift tracker.
• Sections. Tag shifts by stand or entrance and see tips by section.
• Effective Rate and Insights. What each shift paid per hour, which days and venues pay best, and how this month compares with last. See tip tracking.
• Tip Reporting. Compares the tips you earned with the tips you reported, by month. On Android it uses the reported tips you enter on each shift; on iPhone it counts your card tips as the reported amount, which won't fit a cash job well.
• Paycheck Check. Enter a pay stub and Cashout compares it with the shifts you logged; cash tips aren't expected on the check. The current iPhone version tends to flag tipped workers' stubs as a mismatch even when they're right. See Paycheck Check.
• Taxes and Tax Savings. Estimates federal income tax, Social Security and Medicare, and state tax on your wages and tips, and tracks what you set aside. It doesn't include the No Tax on Tips deduction yet. See tax estimates.
• Export Shifts. CSV or PDF of any date range, plus a year-end tax summary PDF.

What it doesn't do: Cashout doesn't count cash for you or connect to your employer's payroll, and it doesn't report anything to your employer or the IRS. You enter each shift by hand.

Common questions

Do I have to report cash tips if my employer never asks?

Yes, once they reach $20 in a month at that job. The report is due by the 10th of the next month. Tips you don't report still go on your tax return, along with Form 4137 for the Social Security and Medicare tax.

Is the valet charge on the ticket a tip?

No. A charge the customer has to pay is a service charge under federal wage law, and it isn't a qualified tip for the tax deduction even if part of it is paid to you.

Does No Tax on Tips cover valets?

Yes. Parking and valet attendants are on the Treasury list as code 801. For 2026 the tips have to be reported, on your W-2 in box 12 code TP or on Form 4137, and the $25,000 cap and income phase-out apply.

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