Historical evidence on giving helpful workers cash gratuities to express appreciation is all over the map. One report suggests tipping began before the Romans, another mentions the Middle Ages.
To add to the confusion, some researchers believe the word “tip” was used in English coffee houses and stood for “To Insure Promptitude.” Like the origin of tipping, there’s no consensus on that theory either.
A point of agreement: By the seventeenth century, slipping a coin into a worker’s hand for better service was happening all over Europe— but not in America.
That changed after the Civil War when people of means began traveling abroad. They brought the idea of tipping back to the US. By the late 1800’s, giving a gratuity to a waiter or a porter, especially in fancy restaurants or hotels, had become an established practice in many states.
During those early times, a tip in a commercial establishment cost Europeans five percent. In America, the amount rose to double that. As tipping took hold, restaurants reduced the wages of wait staff. Some establishment owners—and unscrupulous fellow workers—also confiscated the tips employees received.
Today, special rules apply to tipped employees under the US Fair Labor Standards Act. In addition, the Internal Revenue Service offers an educational program to teach industries where employees are routinely tipped about compliance with tax laws.
Whatever the true history of tipping, one thing about the present is clear: Tips are income, and are subject to tax.