Why the distinction matters
A tip is generally a voluntary payment. A service charge is typically a fee set by the business; the rules governing its treatment can differ from those for tips, including how proceeds are distributed to workers.
What to check on a restaurant receipt
- Find any line labeled “service charge,” “automatic gratuity,” or “large-party fee.”
- Read the restaurant’s explanation, when available.
- Decide whether you want to leave an additional voluntary tip.
Example: On an $80 subtotal, a 20% mandatory charge is $16. It may or may not operate like a voluntary tip. Check the receipt before adding a further percentage.
Local laws and restaurant practices vary. This guide explains the arithmetic and common terms; it is not legal advice.