FICA Tip Credit Calculator
Get back part of the employer Social Security and Medicare taxes you already paid on employee tips — the federal §45B tip credit, claimed on Form 8846.
If your employees report tips and you pay the employer share of FICA on those tips, the §45B credit can offset much of that employer FICA. Many owners never claim it — or underclaim it — because the rules are easy to misread.
The most common mistake: people compare tips against their state minimum wage. The §45B threshold is a federal rate — the frozen $5.15 federal rate for food and beverage, and the current $7.25 federal rate for beauty and personal care — not your state minimum. In states that already require a full cash wage before tips, that usually means all reported tips are creditable.
This calculator runs entirely in your browser — your employees' wage data never leaves your device. Start with a quick screening estimate, then build a detailed Form 8846 worksheet to take to your CPA.
Threshold for this category: $5.15/hour — the frozen federal rate.
Examples
Full-cash-wage state
A restaurant paying the full minimum wage before tips often sees all reported tips become creditable — roughly $765 of credit per $10,000 in tips.
Tip-credit state
Where the cash wage is below the federal threshold, part of the tips offsets the minimum-wage floor first, so a portion is non-creditable — the calculator figures the split for you.
Prior years are optional
Earlier years are not added automatically. You can review a prior year only after entering that year's own payroll facts; whether it can be amended is a question for your CPA.
Frequently asked questions
What is the FICA tip credit?+
It is a federal income-tax credit (IRC §45B, claimed on Form 8846) for the employer share of Social Security and Medicare taxes you paid on creditable tips — the reported tips that remain after the portion needed to bring the employee's cash wage up to the applicable federal rate ($5.15 for food and beverage, $7.25 for beauty and personal care) is set aside.
Is the threshold my state's minimum wage?+
No. The §45B threshold is a federal rate — the frozen $5.15 for food and beverage and the current $7.25 for beauty/personal care. Your state law matters only through the actual cash wage you pay.
Does my data get uploaded anywhere?+
No. Every calculation and PDF runs in your browser. Saved sessions live only in this browser's local storage.
Can I review prior years?+
Possibly — but only after you enter that year's own payroll facts. This tool never assumes a prior year is amendable; confirm timing and eligibility with your CPA.