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FICA Tax Tip Fairness

GET INVOLVED

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.

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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.

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.

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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) 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. Donate today!

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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!

Let us know how you would like to take action!

 

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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.

Want to get more involved? Email Advocacy Program Manager, Kati Rapoza to take part in communicating further with your Members of Congress.

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

“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.”

- Archie Todd Currie, 5 location Sport Clips owner

“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

Bill Sponsors

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Darin LaHood (R-IL)

Suzan DelBene headshot

Suzan DelBene (D-WA)

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Ben Cardin (D-MD)

Tim Scott (R-SC)

Take Action Now!

Salons across the country are struggling financially and many will not make it through this crisis. Sign on to the letter below to ask Congress to include a retroactive FICA tax tip credit for salons in the next stimulus package. Salons have been the hardest hit by this pandemic and need funds now to ensure they will remain in business. The beauty industry needs your voice!

Letter to Congress

Take Action