Employment-based salons have been subject to unfair disparities in the tax code for decades. As service sector small businesses commonly owned by women and minorities, the beauty industry is deserving of equitable access to the existing 45 (b) tax tip credit which will create tax parity allowing salons to thrive.
In 1993 Congress passed the 45B FICA tax tip credit allowing restaurants to claim a dollar-for-dollar tax tip credit on the employer portion of FICA taxes that businesses pay on tips that employees receive directly from their customers.
As the second-highest tipped industry, salons should receive parity with the restaurant industry in the tax code, but presently they do not. Including the salon and spa industry in this legislation could help our industry greatly.
The 45B FICA Tax Tip Credit for Salons is bipartisan, bicameral legislation which directly help women, minorities, and small business owners while shrinking the tax gap and increasing tip reporting compliance.
Hair salons, barbershops and other beauty service establishments are some of the most reliable paths to the middle class for women and minorities, employing more than 2x the national average.
Expanding this credit will help marginalized communities build a better future for themselves and their families.
The PBA Issue Advocacy Fund (IAF) is generously supported by contributions from those who work within and are associated with the professional beauty industry. Your donation to the Fund helps ensure we retain the leadership and financial resources necessary to influence and participate in the public policy process at both the state and federal levels. With your financial support, we are able to meaningfully engage in strategies that benefit the professional beauty industry and advocate for positive change.
The PBA Issue Advocacy Fund accepts both personal and corporate contributions. The Professional Beauty Association (PBA) collects and administers these funds. Contributions to the Fund are not tax-deductible as charitable contributions or as business expenses because the contributions will be used for lobbying and other similar expenditures.
Download the toolkit and share with your industry friends and clients why the 45B FICA tax tip credit is vital to our industry’s success.
Do the math and find out how much you would save with the FICA tax tip credit.