What Auto-Gratuity Actually Is
Auto-gratuity, sometimes called a mandatory service charge, is a tip the restaurant adds for you. It shows up as a line item on the bill, usually labeled "service charge," "gratuity," or "auto-grat." Most restaurants apply it to parties of six or more. Some set the cutoff at eight. The percentage is almost always 18%, though some higher-end spots charge 20%.
Restaurants add it because large groups are hard on servers. A table of eight takes more coordination, more trips, and more time than two four-tops. Without auto-grat, servers on big tables have historically been undertipped relative to the effort involved. The charge fixes that, and it means you do not have to do any tipping math yourself, which is either a relief or mildly annoying depending on how much you like doing math.
Auto-gratuity is legal in all U.S. states. Under IRS rules, a mandatory service charge is technically classified as a restaurant's revenue, not a tip, which affects how the income is reported for tax purposes. What matters to you as a diner: it goes to staff, the amount is fixed, and you owe it.
How to Read a Group Bill
Before you split anything, look at what you are splitting. A group restaurant bill typically has:
- Subtotal: the food and drinks before tax or gratuity
- Auto-gratuity: usually 18% of the subtotal, listed as a separate line
- Tax: calculated on the subtotal (varies by state)
- Total: everything added together
- A line for "additional tip" or "extra gratuity" that is often blank
That last line trips people up. It is not asking you to tip again. It is an optional field for guests who want to add more above the 18%. You can leave it blank. Most people do.
The trap is the credit card terminal. After a large-party meal with auto-grat already on the printed receipt, many point-of-sale systems still prompt for a tip percentage when you tap your card. If you tap 20%, you are adding 20% on top of the 18% already included. Read the receipt before you touch the screen.
Concrete Example: 8 People, $320 Check
Here is the math for a realistic group dinner.
| Item | Amount |
|---|---|
| Food and drinks (pretax subtotal) | $320.00 |
| Auto-gratuity (18%) | $57.60 |
| Tax (assume 8%) | $25.60 |
| Total bill | $403.20 |
| Per person (8 guests, even split) | $50.40 |
Note that the $403.20 total already includes the tip. No one needs to add anything else. Each person owes $50.40 and can move on with their evening.
If you want to use the tip calculator to verify this or adjust for a different tip percentage or party size, it handles group splits directly.
Do You Tip on Top of Auto-Gratuity?
No, not as a rule. The 18% covers the obligation. The only case where adding more makes sense is genuinely exceptional service, and "exceptional" means something specific: the server handled a chaotic eight-person table with substitutions and split orders and still got everything right without complaint. In that case, a few extra dollars per person is a reasonable way to say so.
What you should not do: tip the full 20% again via the card terminal because you did not notice the auto-grat on the paper receipt. That is how people accidentally tip 38%.
How Much Do You Tip for a $100 Bill?
At a standard sit-down restaurant, the math is simple:
| Tip Percentage | On a $100 Bill |
|---|---|
| 15% | $15 |
| 18% | $18 |
| 20% | $20 |
| 25% | $25 |
For most dine-in meals, $18 to $20 is right for good service. Fifteen percent is the accepted minimum. Below that, leave a note explaining a problem rather than sending a message with math the server may not even notice until the end of their shift.
If that $100 bill is part of a large-party check with auto-grat included, the gratuity is already in the total. You are done.
Is 20 Percent a Good Tip?
Yes. Twenty percent became the de facto standard for good service in American restaurants over the past decade or so. It replaced 15% as the mental baseline. A 2023 survey by the National Restaurant Association found most restaurant workers in full-service settings rely on tips for the majority of their income, and 20% reflects that reality.
For exceptional service, 25% is a way to register that explicitly. For basic or adequate service with no obvious problems, 15% to 18% is fair. Below 15%, you are communicating dissatisfaction. On a large party bill where auto-grat handles it, 18% is the default and you are not expected to do anything extra.
Do You Tip on the Total or Subtotal?
Tip on the pretax subtotal. Tax goes to the government, not to the server, so calculating a tip on top of it adds cost for no reason. In practice, the difference on a $60 meal is about $1.20 at 8% tax and 20% tip, which is not going to determine anyone's financial situation. But the technically correct answer is pretax, and most tipping guides agree on this.
For group bills, auto-gratuity is almost always calculated on the pretax subtotal as well.
Splitting Fairly When Orders Vary
Even splits work when everyone ordered roughly the same thing. When one person had the $18 pasta and another had the $48 steak and two bottles of wine, an even split feels like a punishment for ordering modestly.
A few approaches that actually work:
- Itemize: each person pays for what they ordered, plus their share of any shared items, plus the per-person share of auto-grat and tax. More work, but accurate.
- The high-spender covers the shared items: whoever ordered the extra appetizers or the expensive wine covers those, and the rest split the remainder evenly.
- Venmo it out: one person puts the full bill on a card for the points, others pay their itemized share via transfer.
For groups that eat out together regularly, the itemized approach removes any lingering annoyance about who subsidized what. The guide on splitting a tip covers the math for itemized splits in more detail.
What to Check Before You Pay
At any group dinner where auto-grat might apply, a 30-second check saves confusion:
- Find the line labeled "gratuity," "service charge," or similar on the printed receipt.
- Confirm the percentage (typically 18%).
- When the card terminal prompts for a tip, check whether it is asking you to add to an already-tipped total or starting from scratch. If auto-grat is on the receipt, select "no additional tip" or the equivalent.
- Divide the full total (including auto-grat and tax) by the number of people for the even-split amount.
None of this requires a finance degree. It requires reading one line on a receipt before you put your card away. For anything more complicated, the U.S. tipping etiquette guide covers service charges by industry and region.