Gratuity Calculator
Calculate your employment gratuity based on years of service and salary, or figure out the right tip for any service. Whether you're planning retirement benefits or dining out, get accurate gratuity amounts instantly.
Gratuity by Years of Service
Understanding Gratuity
Gratuity is a retirement benefit paid by employers as a token of appreciation for an employee's service. It's also a customary amount paid for services rendered. Understand both contexts.
Employment Gratuity
A lump-sum payment made to employees upon retirement, resignation, or completion of a minimum service period (typically 5 years). The amount is based on length of service and last drawn salary.
Standard Formula
Gratuity = (15 × Last Drawn Salary × Years of Service) ÷ 26. This formula uses 15 days of wages for each completed year of service, calculated on a 26-day work month.
UAE/GCC Formula
For the first 5 years: 21 days of basic salary per year. After 5 years: 30 days of basic salary per year. Total end-of-service gratuity cannot exceed 2 years' total salary.
Tipping Etiquette
In the US, standard tips range from 15–20% of the pre-tax bill. For excellent service, 20–25%. For takeout, 10–15%. Hair salons, taxis, and hotel staff have their own tipping norms.
Tax on Gratuity
Employment gratuity may be tax-exempt up to a certain limit depending on your jurisdiction. In India, gratuity up to ₹20 lakhs is tax-free. In the US, gratuity is generally taxable as regular income.
Eligibility Rules
Most jurisdictions require a minimum of 4–5 years of continuous service to qualify for employment gratuity. The benefit is prorated — more years of service means a proportionally larger payout.
Tipping Guide by Service Type
Tipping customs vary by service industry and region. This guide covers the most common tipping situations in the United States so you always know the appropriate amount.
Restaurants & Bars
Sit-down dining: 15–20% of pre-tax bill. Bartenders: $1–2 per drink or 15–20% of tab. Buffets: 10%. Takeout: 0–10% (optional). Large parties (6+): check if 18–20% auto-gratuity is included. Counter service: $1–2 or tip jar discretionary.
Transportation
Taxi/rideshare: 15–20%. Valet parking: $2–5 when car is returned. Airport shuttle: $1–2 per bag. Limo/car service: 15–20% (check if included in contract). Movers: $20–40 per mover for a full-day move, $10–20 for a half-day.
Personal Services
Hair stylist: 15–25%. Spa services (massage, facial): 15–20%. Nail technician: 15–20%. Tattoo artist: 15–25%. Barber: $3–5 or 15–20%. Tip on the full price even when using discounts or coupons.
Hotel & Travel
Housekeeping: $2–5 per night (leave daily, not at checkout). Bellhop: $1–2 per bag. Concierge: $5–20 for special assistance. Room service: 15–20% (check if auto-gratuity is added). Tour guide: $5–10 per person for group tours.
Delivery Services
Food delivery: 15–20% ($5 minimum). Grocery delivery: 10–15% of order total. Furniture delivery: $5–20 per person. Pizza delivery: $3–5 or 15–20%. Large/heavy item delivery: $10–20 per person, more for stairs or difficult access.
Home Services
House cleaner (regular): $10–20 per visit or holiday bonus of one cleaning fee. Landscaper/gardener: not expected, but $20–50 holiday tip appreciated. Plumber/electrician: not expected (they set their rates). Pet groomer: 15–20%.
Employment Gratuity Planning Tips
If you're planning for retirement or considering a job change, understanding how gratuity accumulates and how to maximize it can add tens of thousands to your end-of-service benefits.
Gratuity Grows Exponentially
Since gratuity is calculated on last drawn salary × years of service, salary increases compound your benefit. A 5% annual raise over 20 years means your gratuity at year 20 is roughly 2.5x what it would be calculated on your year-1 salary.
The 5-Year Cliff
Most gratuity laws require minimum 5 years of continuous service. Leaving at 4 years and 11 months could forfeit your entire gratuity. If you're close to the 5-year mark, carefully consider the financial impact of leaving early versus staying a few more months.
Salary Structuring
Gratuity calculations typically use basic salary + dearness allowance, not total compensation. Higher basic salary percentage means higher gratuity. When negotiating compensation, understanding the basic-to-total ratio impacts your long-term retirement benefits.
Gratuity vs Other Benefits
Compare gratuity with employer provident fund, pension plans, and stock options. In some cases, a higher 401(k) match or better stock vesting schedule may be worth more than gratuity. Evaluate your total benefits package holistically.
Tax Planning for Gratuity
Plan the tax implications of receiving a lump sum. In some jurisdictions, you can reduce the tax impact by timing your separation, combining with retirement account rollovers, or spreading the receipt across tax years if multiple gratuity components are involved.
Investing Your Gratuity
Gratuity is a lump sum — invest it wisely. If retiring, allocate to a diversified retirement portfolio. If changing jobs, consider rolling into tax-advantaged accounts. Avoid spending gratuity on depreciating assets; treat it as a wealth-building opportunity.
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Compute employment gratuity based on salary and service years, or calculate service tips for any bill amount.
Calculate Now →Gratuity FAQs
Common questions about employment gratuity, tipping, and how gratuity is calculated.