Introduction
In 2026, a Point of Sale (POS) is no longer just a cash register. It is your inventory manager, your payroll clerk, and your IRS compliance officer.
With the new “No Tax on Tips” laws taking effect this year, your POS must be able to separate “Cash Tips” from “Service Charges” and report them on the new W-2 forms. If your current system can’t do this, you are exposing your staff to audits and yourself to fines.
We tested the top systems to see which ones handle the 2026 tip reporting rules best: Toast, Square, and TouchBistro.
🏆 Summary: The Top 3 Systems for 2026
| Software | Best For… | Price | Rating |
| Toast | Best Overall (Full Service) | $69/mo+ | ⭐⭐⭐⭐⭐ |
| Square | Best Value (Cafes/QSR) | $0/mo+ | ⭐⭐⭐⭐⭐ |
| TouchBistro | Best for Tableside (iPad) | $69/mo+ | ⭐⭐⭐⭐ |
1. Toast (The Industry Standard)
Toast is built only for restaurants. In 2026, it remains the most powerful tool for full-service dining, especially with its new inventory features.
Why it wins:
- 2026 Compliance: Toast has updated its payroll module to handle the new “Occupation Codes” required by the IRS for tipped employees.
- Handhelds: The Toast Go 2 handhelds increase table turn times by 15-20% because servers can take orders and payment at the table.
- Inventory: It tracks food costs down to the ingredient level (e.g., “How many ounces of cheese on a pizza?”).
The Catch: You must use their credit card processing, and the contract terms can be tricky to navigate.
- Best For: Full-service restaurants and bars doing $1M+ in sales.
2. Square for Restaurants (The Flexible Choice)
Square has grown up. It used to be for coffee shops, but the “Plus” plan is now powerful enough for sit-down venues.
Why it wins:
- No Contracts: unlike Toast, Square doesn’t lock you in. You can leave anytime.
- Ecosystem: It integrates seamlessly with 7shifts for scheduling and QuickBooks for accounting.
- Price: The free tier is perfect for ghost kitchens and food trucks. You just pay for processing.
The Catch: Its inventory tools aren’t as deep as Toast’s. It struggles with complex “raw ingredient” tracking.
- Best For: Cafes, QSR (Quick Service), and Ghost Kitchens.
3. TouchBistro (The Hybrid Warrior)
TouchBistro runs on a local network (iPad-based), meaning it doesn’t crash if your internet goes down.
Why it wins:
- Stability: In a busy Friday night rush, you can’t afford a cloud outage. TouchBistro keeps running offline.
- Tableside Mastery: It was designed for “Tableside Ordering” from day one, not as an afterthought.
- Reservations: It includes a built-in reservation system (no need to pay for OpenTable).
The Verdict: The best choice for venues with spotty internet or high volume.
- Price: Starts at $69/month.
4. The “Tip Credit” Warning
If you operate in Washington D.C., Chicago, or California, be careful.
Starting July 1, 2026, the “Tip Credit” is being phased out in several regions.
- What this means: You may have to pay servers the full minimum wage (e.g., $17.95/hr) on top of their tips.
- The Fix: Ensure your POS can handle “Service Charges” (automatic 20% fees) if you decide to switch models to cover the labor cost.
Conclusion: Which POS Fits Your Menu?
- Choose Toast if: You run a busy sit-down restaurant and need granular food cost tracking.
- Choose Square if: You are a coffee shop or counter-service spot that wants simple, transparent pricing.
- Choose TouchBistro if: You need a rock-solid system that works offline.
Don’t forget the new Tax Break:
Your employees can now deduct $25,000 in tips tax-free.
👉 Read Next: The Restaurant Tax Guide 2026 (No Tax on Tips & FICA Credit)
