Some of our tip income is taxed, we hide as much as we can.
It varies massively across the country and in most places servers are excluded from minimum wage laws. The federal minimum wage for servers is $2.13 an hour, with the expectation being that tips will get them up above $7.25 per hour (and that the employer should make up the difference if they don't). Some states have higher standards than this. $7.25 an hour with a 40 hour work week comes out to about $15,000 a year and of course a lot of these jobs don't offer any sort of healthcare benefits. Edit: I was curious to see what the actual average is opposed to the minimum. The Bureau of Labor Statistics puts the average annaul wage at around $20,000 or $10 an hour. This data does include reported tips at least.