Texas tipped wage and tip credit for restaurants (2026 guide)

Texas has no minimum wage of its own that differs from the federal one, which makes payroll simpler than in many states and mistakes just as costly. This guide sets out the federal figures that apply in Texas, how the tip credit works and how to avoid the errors that lead to back-pay claims. It is general information, not legal advice. Confirm the figures with the Texas Workforce Commission and the U.S. Department of Labor.

What is the Texas minimum wage?

Texas follows the federal minimum wage, which is $7.25 an hour. Cooks, dishwashers, hosts and other staff who do not receive tips must be paid at least that. Check the latest posters and notices each January, and ask your payroll provider whether any local rule applies to your city.

What is the tipped wage and tip credit?

Federal rules, which apply in Texas, allow a cash wage of $2.13 an hour for tipped employees, with a maximum tip credit of $5.12 an hour. The employee's cash wage plus tips must reach $7.25 for every hour worked, and if they do not, the business must pay the difference for that workweek. The credit is optional. You can pay more than the minimum cash wage, and many Texas restaurants do, particularly when staff are hard to find.

Who counts as a tipped employee?

A tipped employee is someone who customarily and regularly receives tips. The test also depends on a monthly tips threshold, so ask the Texas Workforce Commission or your payroll provider which applies. In practice, servers, bartenders and bussers who share in tips qualify. A host who receives a share of the pool may qualify too. Cooks and dishwashers do not.

What notice must you give?

Tell each tipped employee in advance, ideally in writing, that you will take a tip credit, the cash wage you will pay, the amount of the credit and that all tips belong to the employee except for a lawful pool. Keep a signed copy. If you cannot show the notice, the Department of Labor may treat the credit as not available, and you could owe the difference between the cash wage and the full minimum for every hour worked.

How do you calculate make-up pay?

Test each workweek. Add the cash wage paid and the tips received, divide by the hours worked and compare the result to $7.25. If it falls short, add the difference to the paycheck. A slow week, a long closure for a storm or a cut shift can all push a server below the line. Your payroll system should flag it, but check it by hand on a bad week.

How does overtime work?

Overtime for a tipped employee is based on the full minimum wage, not on the cash wage. Ask your payroll provider to show the formula in writing and test it on a real week. Many systems default to the cash wage unless they are set up correctly.

What about tip pools and service charges?

If you take a tip credit, only employees who customarily receive tips may share in a pool, and managers and owners may not take from it. A mandatory service charge on a large party is generally revenue to the business, not a tip, and it is subject to tax. Be clear on the menu and the check about what a charge is for, and pay it out as wages if you choose to share it.

What should you do this month?

Pick a slow week and run the numbers for each tipped employee. Collect signed notices. Check that managers are not in the pool. Ask a payroll professional to review your setup once a year, and calendar a reminder each January to check for changes.

How do you handle a split shift or a double?

Count every hour in the workweek, not the shift. A server who works lunch, takes a break and returns for dinner has worked the hours on the clock, and your system should add them. Check how breaks are handled, since a short rest is usually paid time while a meal break of 30 minutes or more may not be, under federal rules. Ask your payroll provider to confirm how each is set up.

How should you train managers on wage rules?

Hold a short session once a year. Cover the notice, the tip pool, overtime and how to read a payroll report. Give managers a one-page checklist, and tell them whom to call with a question. Managers who understand the rules make fewer mistakes under pressure, such as sending a server home early without understanding the pay effect.

Wondering how to keep your best servers busy enough to stay?

Tips follow traffic. Mosey is a food-first app where diners find places by dish, mood and neighborhood and rate what they ate. A restaurant can host a menu page, earn visibility from ratings alone and reply to guests, which helps fill the tables that make a server's shift worth working.

More guides for your business:

• How do I get more customers to my Texas restaurant? (2026)
• Texas food handler cards and food manager certification: what you need
• Texas restaurant sales tax and the mixed beverage tax explained

More in the US guides for food businesses.