Let’s start today with a couple important reminders

  1. If you filed for an extension and haven’t yet submitted your 2022 taxes, the deadline for doing so is coming up quickly. Let’s get things settled before October 16.  If we can help, here’s the contact info for our office locations → https://www.pronto4tax.com/contact
  2. The moratorium on paying back student loans is over and the first payments will start back again in October. If you have a student loan, now’s the time to make a plan for repayment and be ready for October 1.  Also, consider if the new SAVE plan is right for your situation. In some cases, it could help bring down your monthly payment and reduce your interest payments. 

In other news, it’s the time of year for pumpkin-flavored everything, including the infamous pumpkin spice latte. If you’re a fan, you probably counted down the days to hit your favorite coffee shop to grab one. 

And at the end of your transaction, the little tablet screen is swiveled your way to sign and request a tip. You feel a little put on the spot, and not wanting to seem cheap, you tap an option to add a tip. Okay, no big deal, right?

The problem is, this kind of thing is happening everywhere. We’re all getting asked to leave a tip in more and more situations where we previously wouldn’t have offered a tip (or been expected to give one).

During 2020 and 2021, you might have been more likely to drop a little extra in the tip jar to help workers out, but with rising prices and the pervasiveness of tip culture, it’s becoming less appealing. 

If you’re breathing a little sigh of annoyance at the tablet screen tip pressure, you’re not alone in that sentiment. Around two-thirds of Americans feel the same way.

There are a lot of reasons for “tipflation,” and while giving tips in certain cases is really important, there are also other cases where you don’t have to.

Let’s talk about it and attempt to clear up some of the confusion and awkward feelings…

Tipflation: Combating Tipping Pressure
“Doing the little things can make a big difference.” – Yogi Berra

At your favorite bakery or bistro, you come face-to-face with a digital payment terminal suggesting a minimum tip of 18%. You let out a small sigh, not because you don’t want to tip, but because the same thing happened when getting a coffee the day before… and when you had food delivered last week… and when you got a ride to the airport for a work trip a few weeks back. 

It’s understandable why you’d be less than enthused with giving a tip nowadays.

But while tipflation might have brought you to a place of begrudging tipping, it’s worth remembering that some workers depend heavily on tips for their livelihood. 

The federal minimum wage for tipped workers is still at $2.13 (though some states, such as California, have higher standards for that, minimum wage still doesn’t cover the real living expenses of many employees). This means restaurant servers who juggle multiple tasks at once rely on tips to make ends meet. These days, the widely accepted amount sits at 20% of the bill.

There are also some jobs like food delivery drivers who are paid a bare minimum and depend on your tips to make the difference and help with operational costs with their vehicle. 

Other workers considered to be tipped workers include housekeeping staff in hotels, taxi drivers, entertainers, valets, bartenders, and hairstylists (with some exceptions). 

So what about quick counter services that ask for tips starting at 18%, sometimes even going up to 22% or even 30%? Where you might have kindly left a $1 or your change in the tip jar before, this new trend might make you feel obligated to tip more than you’re comfortable with. Where do we draw the line?

The truth is, we are not obligated to tip for counter service. It’s an act of goodwill, but not required. And we’re not required to stick with the easy-options on the screen. Most tip screens offer a custom tip option. It might take a little more time at the register, but it gives you freedom to only add the amount you want to add. 

One note for counter service: It’s good to keep in mind that workers in quick-service restaurants and coffee shops are generally not paid high wages. They can benefit from a little extra. Again, that’s about generosity, not obligation.

If someone is a professional, or salaried, or in a trade, no tips are required — and could even be seen negatively.  For example, our company policy at Pronto Income Tax is that our tax professionals do not accept tips.

If there’s an open bar at an event, you generally don’t have to tip. It’s (usually) the case that the event hosts have already covered this. 

An area that we especially don’t have to tip for is bad service. Tipping is a way to say “thank you” for good service. This can be trickier in a restaurant, as poorly cooked meals and slow service are not on the server. Withholding a tip in that situation could be unfair.

Besides knowing when we don’t have to tip, we can also think about limiting the situations in which a tip is required. Since tip and fees can take a food deliver order to almost double the cost, we can consider just driving to the location to get the meal ourselves.

Also, we can consider supporting businesses that are moving to a living wage model. This means they pay their employees enough to live comfortably, regardless of whether or not they receive tips. Here are a few well-known businesses using this model.

The changing tipping culture is going to require a bit of understanding and kindness on all of our parts. Knowing when and how much to tip can make a positive difference without the feeling of being forced to give more than we’d like. This way, we can still show your appreciation for service workers without feeling the pinch of tip fatigue.

Hopefully this helps, we do realize this is an issue that more and more people are mentioning as a point of frustration.

That being said, since many of our clients are waiters or waitresses, delivery drivers, Uber drivers, and many other professions who rely on tips, we would tend to err on the side of generosity, especially when someone is really doing their very best in serving the customer.

Keeping you in the know

Pronto Income Tax Team