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Service Charge Calculator

Add a restaurant or hotel service charge to a bill with sales tax or VAT: choose whether tax applies to the service charge, add an optional extra tip and split the total between people.

Bill before service charge and tax

Service charge

Sales tax / VAT rate

Is tax charged on the service charge?

Extra tip on top

Number of people

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How it works

service charge = bill × service % · tax = (bill + service charge) × tax % (or bill × tax % if the service charge is not taxed) · tip = bill × tip % · total = bill + service charge + tax + tip · per person = total ÷ people

A service charge is a fixed percentage a restaurant, hotel or venue adds to the bill, often 10–20% and common for large groups. Unlike a tip it is set by the business, and in many places it is treated as part of the sale price, so sales tax or VAT is charged on it too (in the US, mandatory service charges are generally taxable and are wages, not tips, under IRS rules). Check the menu or bill: if a service charge is already included, an extra tip is optional.

Worked example

An $80.00 bill with a 10% service charge adds $8.00. With 8% tax charged on the bill plus the service charge, tax is $7.04 and, with no extra tip, the total to pay is $95.04 — $47.52 each for 2 people. The service charge is 10.00% of the bill and the total is 18.80% above it.

Sources: IRS — Tips versus service charges · GOV.UK — Code of practice on fair and transparent distribution of tips

Frequently asked questions

Is a service charge the same as a tip?

No. A tip is voluntary and goes to staff; a service charge is set by the business and added to the bill. How it is shared with staff depends on the business and local law.

Is tax charged on a service charge?

Often yes. Many US states tax mandatory service charges as part of the sale, and in VAT countries a compulsory service charge is usually part of the taxable price. A voluntary, optional service charge may be treated differently.

Do I still need to tip if there is a service charge?

Usually not — the service charge normally replaces the tip. Some people add a little extra for exceptional service; set the extra tip to 0% otherwise.

How do I calculate a 12.5% service charge?

Multiply the bill by 0.125: on £60 it is £7.50. Add tax on top if it applies to the service charge in your area.

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Estimate only. Store promotions, taxes, fees and refund rules vary — check the terms on the shelf, the receipt or the provider’s quote.