Automatic Gratuity Explained — What You Need to Know
What automatic gratuity is, when restaurants add it, whether you're legally required to pay it, and how to avoid accidentally double-tipping.
7 min read · Updated
What Is Automatic Gratuity?
Automatic gratuity — sometimes called "auto-grat" — is a tip that the restaurant adds to your bill for you, usually 18% to 20% of the pre-tax total. Instead of choosing how much to tip, the amount is calculated and included as a line item on your check.
You've probably encountered it if you've ever dined out with a larger group. It's the "Gratuity" or "Service Charge" line that appears on your bill before you've written anything on the tip line.
When Do Restaurants Add It?
The most common trigger is party size. Most restaurants that use automatic gratuity apply it to groups of 6 or more, though the threshold varies:
- 6+ guests — The most common cutoff
- 8+ guests — Also very common, especially at casual restaurants
- 5+ guests — Less common but you'll see it at some places
- Any party on holidays or special events — Some restaurants auto-grat every table on New Year's Eve, Valentine's Day, Mother's Day, and similar high-volume occasions
Other situations where you might see auto-gratuity:
- Private dining rooms and buyouts
- Catered events at restaurants
- Some resort and hotel restaurants (where it may be called a "service charge")
- Certain prix fixe or tasting menus
Restaurants are generally required to disclose their auto-gratuity policy, and most do — on the menu, on a sign, or verbally when you're seated. But disclosures can be easy to miss, especially the fine print at the bottom of a menu.
Is Automatic Gratuity Legally Required? Can You Refuse to Pay?
This is the question everyone wants answered, and the answer is more nuanced than you might expect.
The IRS Distinction
The IRS distinguishes between tips and service charges. This matters:
- A tip is voluntary. The customer decides the amount. It belongs to the employee.
- A service charge is mandatory. The business decides the amount. It legally belongs to the business, which may or may not pass it along to employees.
Most automatic gratuities are classified as service charges by the IRS, not tips. This means:
- The restaurant can legally require you to pay it — it's part of the bill, like a corkage fee or room charge.
- The restaurant is not legally obligated to give that money to the server (though most do, in whole or in part).
Can You Dispute It?
In practice, if an auto-gratuity was clearly disclosed before you ordered — on the menu, on signage, or verbally — it's enforceable. You agreed to the terms by staying and ordering.
If it was not disclosed and appears as a surprise on your bill, you have stronger grounds to dispute it. In most states, springing a mandatory charge on someone without prior notice is problematic.
The honest advice: if you knew about it and the service was decent, just pay it. If the service was genuinely terrible and you feel the auto-gratuity is unfair, talk to the manager calmly. Most managers will reduce or remove it if there was a legitimate service failure. Making a scene rarely helps.
Can You Adjust It?
This depends on the restaurant's policy:
- Adjusting upward: You can almost always add more on top of the auto-gratuity. If the service was outstanding for your party of 10, adding an extra 2-5% is a classy move.
- Adjusting downward: Some restaurants will reduce it if you ask and provide a reason. Others won't. There's no universal rule. If the auto-gratuity is 18% and the service was poor, it's reasonable to ask management whether it can be adjusted.
How to Spot Auto-Gratuity on Your Bill
This is critically important because failing to spot it leads to double-tipping — and restaurants don't always make it obvious.
What to Look For
Check your itemized bill for any of these line items:
- Gratuity
- Service Charge
- Auto Gratuity
- Suggested Gratuity (Included)
- Large Party Gratuity
It will typically appear after the subtotal and before the total, similar to tax.
The Credit Card Slip Trap
Here's where double-tipping most commonly happens. The restaurant adds 18% auto-gratuity to your bill. You pay the total, which already includes the gratuity. Then the credit card receipt still has a "Tip: ____" line and a "Total: ____" line.
If you write in another tip amount without realizing gratuity was already included, you've just tipped twice. On a $200 dinner, that's an accidental extra $36-40.
Always check the itemized bill before filling out the tip line on a credit card slip. If gratuity is already included, write "included" or draw a line through the tip field and write the same total that's already printed.
Digital Payment Screens
The same trap exists with tablet-based payment. The screen may prompt you to select a tip percentage even though auto-gratuity has already been applied. The tip prompt on the screen may not acknowledge the existing gratuity at all. Look at your itemized bill, not the payment screen, to determine whether you've already been charged gratuity.
How to Avoid Double-Tipping
A simple checklist every time you pay at a restaurant:
- Ask for the itemized bill — not just the total.
- Scan for "gratuity" or "service charge" line items.
- Check the math — if the total seems higher than subtotal + tax, something else was added.
- When in doubt, ask your server — "Does this total include gratuity?" is a perfectly normal question.
- If paying on a tablet or screen, ignore the tip prompt if gratuity is already on the bill.
Our tip calculator has a "round down for included gratuity" option that helps you figure out if and how much additional tip to leave when a base gratuity has already been added.
When Auto-Gratuity Is Actually Fair
Let's be honest about the restaurant's perspective, because it's not unreasonable.
Large parties are difficult to serve. A table of 12 requires:
- Multiple trips for drink orders and refills
- Staggered food delivery
- Split checks or complex payment arrangements
- Often 2-3 hours of table time during which no other guests can sit there
- A higher chance of mistakes simply due to volume
Servers sometimes get stiffed on large party tips — either because the group assumes someone else is covering it, because the bill is so large that 18% feels like "too much" in absolute terms, or simply because large groups are chaotic and the tip gets lost in the shuffle.
Auto-gratuity protects the server from doing their hardest work and getting their worst tip. From that angle, 18% on a large party is entirely fair.
The Rise of the Service Fee
A newer trend worth understanding: some restaurants have replaced traditional tipping with a mandatory service fee (usually 18-22%) applied to every check, regardless of party size. This is different from auto-gratuity on large parties.
These restaurants typically note on the menu that a service fee is included and that additional tipping is not expected. The service fee goes to the restaurant, which uses it to pay staff higher base wages and sometimes fund benefits.
If you see a service fee:
- Don't add a tip on top unless the service was truly exceptional and you want to.
- Read the fine print — some service fees are split among all staff (including kitchen), some go primarily to servers, and some go to the business itself. Transparency varies.
The Bottom Line
Auto-gratuity exists to protect servers who work large parties, and in most cases it's a fair and reasonable practice. Your job as a diner is simple: read your bill carefully, check for included gratuity before tipping, and ask questions if anything is unclear.
If you're planning a dinner with a large group and want to estimate the total cost including auto-gratuity, run the numbers through our tip calculator before you go. Knowing the likely total in advance helps you pick the right restaurant for your budget and avoids any surprises when the check arrives.