Indiana tip pooling laws & tipped minimum wage
In Indiana, employers can pay tipped workers $2.13/hr as long as tips bring them to the $7.25 minimum — here's how that works and who can legally share your tips.
| Regular minimum wage | $7.25/hr |
| Minimum cash wage for tipped workers | $2.13/hr |
| Maximum tip credit | $5.12/hr |
| Tips belong to | Employees — always |
A tip credit lets an employer count your tips toward the minimum wage it owes you. Rates reviewed July 2026. Rates change — confirm with the Indiana labor department. Not legal advice.
Indiana uses the federal floor and bars local minimum-wage ordinances
Indiana’s minimum wage is $7.25 an hour, matching the federal rate. Under Indiana Code 22-2-2, tipped workers may be paid a cash wage of $2.13 an hour, with the employer claiming a tip credit of up to $5.12, as long as your tips bring the total to at least $7.25.
Indiana also preempts local wage-setting. Under Indiana Code 22-2-2-10.5, a city, town, or county may not establish a minimum wage that differs from the state or federal minimum. No Indiana locality can set a higher tipped or regular minimum wage.
If your tips do not reach $7.25, your employer owes the difference
The tip credit is not permission to pay you below minimum wage. In any workweek where your $2.13 cash wage plus your tips do not average at least $7.25 an hour, your employer has to make up the shortfall in that paycheck.
Your employer also has to tell you before taking the tip credit. If they never gave you that notice, they generally owe you the full $7.25 an hour for the affected time.
How to recover unpaid or withheld tips in Indiana
For unpaid wages, you can file a wage claim with the Indiana Department of Labor. You may also file a complaint with the U.S. Department of Labor Wage and Hour Division, which enforces the federal tip rules that Indiana follows.
One rule never bends: managers, supervisors, and owners may not keep any part of your tips.
Tip pooling in Indiana
Indiana follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $2.13/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
One federal rule applies everywhere: managers and supervisors can never take from a tip pool. Separately, credit card processing fees may only be deducted from tips where state law allows it.
What this means for your tip-out
Because part of your legal wage in Indiana comes from tips, the employer's tip credit assumes those tips reached you. Use the tip-out calculator to split a shift by your house's percentages or by hours, and see standard tip-out percentages to check whether your house's rates are typical.
Indiana tip law FAQs
What is the tipped minimum wage in Indiana?
Employers in Indiana may pay tipped employees a cash wage of $2.13/hr and claim a tip credit of up to $5.12/hr toward the $7.25 minimum wage. If tips don't close the gap in a workweek, the employer must make up the difference.
Is mandatory tip pooling legal in Indiana?
Indiana follows the federal baseline: employers may require tip pooling. If your employer takes the tip credit (pays $2.13/hr cash), the pool may only include customarily tipped workers — servers, bussers, bartenders, runners, hosts. Back-of-house can only be included if everyone is paid full minimum wage with no tip credit. Managers and supervisors are always excluded.
Can my manager take a share of the tip pool in Indiana?
No. Federal law prohibits managers, supervisors, and owners from keeping any portion of employee tips in every state, including Indiana. A manager may keep only tips they directly and solely earned (e.g., a table they personally served start to finish).
Can a city in Indiana set a higher tipped minimum wage?
No. Indiana Code 22-2-2-10.5 bars any city, town, or county from setting a minimum wage that differs from the state or federal minimum, so no Indiana locality can raise the tipped or regular minimum wage.
Does Indiana have its own tip-pooling law?
No. Indiana adds nothing beyond the federal FLSA, so federal tip-pooling rules apply: only customarily tipped staff can be in the pool when a tip credit is taken, and managers or owners can never keep tips from it.