Government Affairs

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For years, ISBN has worked tirelessly to obtain the same tax credit for FICA taxes that salons and spas pay on tips, a credit that the food and beverage industry has enjoyed since 1993. ISBN is working closely with PBA and other associations in our industry, including spas, massage, and nails. We have educated many more members of Congress about this bill, and we are in a much stronger position than ever before. Now is the time to get to know your US Representative and encourage them to sign on as a co-sponsor of our bills. Get involved and make a difference for this legislation, which will pay dividends in the form of substantial tax credits for years to come.

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What is the FICA Tax Tip Credit?

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.

Talking Points

H.R. 45

S. 45

The Facts

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.

The Stats

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.

0 %

are

African American

0 %

are

Asian

0 %

are

Women

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of employment-based salons are

Women-Owned

Expanding this credit will help marginalized communities build a better future for themselves and their families.

PBA Issue Advocacy Fund

The PBA Issue Advocacy Fund (IAF) fund is solely dedicated to supporting the full cost associated with the passage of the "Small Business Tax Fairness and Compliance Simplification Act" also known in the industry as the 45B Tax Tip Credit legislation, currently H.R.45 and S.45.

This bill will give employers a dollar-for-dollar tax credit for the employer’s share of FICA taxes paid on tips received by employees. Restaurants have enjoyed this tax credit since 1993, it’s time our industry, the second largest tipped industry, receives the same tax treatment.

The PBA Issue Advocacy Fund accepts both personal and corporate contributions. PBA collects and administers these funds, ensuring they are spent as intended. Contributions to the Fund are not tax-deductible as charitable contributions or as business expenses because the contributions will be used for lobbying fees and educating Members of Congress about the need for this legislation.

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How you can help

We need more support than ever to include salons in the 45B FICA tax tip credit. Here is how you can help take action and spread the word!

Get Involved

Let us know how you would like to take action!

Plan a Meeting

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

Do the math and find out how much you would save with the FICA tax tip credit.

Alliance for Tax Equity

International Franchise Association
National Association of Barber Boards of America
National Association of Women Business Owners
National Interstate Council of State Boards
Personal Care Products Council
Professional Beauty Association
Professional Beauty Employment Coalition
The Esthetics Council
Associated Skin Care Professionals
Associated Hair Professionals
Associated Nail Professionals
Intercoiffure America Canada
International Salon Spa Business Network
International Spa Association
Cosmetologists Chicago

What the Industry is saying

“The beauty industry has been working to get this much needed legislation passed for as long as I can remember (and I have been in the industry a long time!). It is truly hard to believe that we have had to work this hard to have legislation passed that is simply common sense fairness based on existing laws around the same credit received by the restaurant industry. My team is my most important asset. Receiving this credit would allow me to shift from paying taxes on revenue my business does not receive to further investing in the women who work in my salon."

Paige Garland

Rachel’s Salon & Day Spa

“As a long-time business owner, there has been an inequity in the federal tax code, giving restaurant owners access to a tax credit while salons have been left out. The 45B FICA tax tip credit allows restaurant owners a dollar-for-dollar tax credit on taxes paid into Social Security and Medicaid from their business on customer-paid tips. This ensures that their restaurant businesses are not losing money by allowing servers to accept tips from customers while maintaining the funds for their servers’ Social Security and Medicaid with the IRS. Considering the current state of inflation, business costs, and the demand to be competitive to retain employees, salon owners need to keep these tax dollars now more than ever!”

Lisa Lane

salon owner of Lisa’s of Annapolis

“The current system penalizes salon owners who declare and pay taxes on their employee’s tips. Extending the 45B credit to the salon industry will increase tax compliance in the second most tipped industry after restaurants and bars."

Edwin Neill

Neill Corp

“As a South Carolina salon owner, it’s hard to reconcile why our highly-tipped industry doesn’t have access to same tip credit as our restaurant neighbors. This credit would keep needed funds in my business and in turn be a huge benefit to my hard-working employees.”