After decades of being excluded, salon, spa, and barbershop owners have finally secured long-overdue tax fairness with the passage of the 45B FICA Tip Tax Credit, one of the most significant legislative victories in beauty industry history.
This new law provides employers with a dollar-for-dollar tax credit on the employer portion of FICA taxes paid on employee tips, correcting a decades-old inequity that has long disadvantaged beauty businesses compared to their counterparts in the restaurant industry.
What is the FICA Tip Tax Credit?
In tip-based industries, employees must report tips as taxable income. Employers, in turn, are required to pay the employer’s share of FICA taxes (Social Security and Medicare) on those tips even though tips are paid directly from the client to the worker.
Since 1993, restaurant employers have received a tax credit to offset FICA costs. Until now, beauty industry employers were excluded.
That has officially changed.
What This Means for Your Business
With the 45B FICA Tip Tax Credit now law, salon, spa, and barbershop owners are finally eligible for the same relief.
This credit will:
- Offset increased FICA liability from higher reported tips
- Free up capital for reinvestment in wages, education, benefits, and growth
- Strengthen women- and minority-owned small businesses
- Encourage transparent and accurate tip reporting
Why It Matters
This is more than a tax credit: it’s a statement of value and validation.
The professional beauty industry is made up of more than 1.3 million professionals—83% women, 47% people of color, and 98% single-location small business owners. The passage of this legislation reflects the industry’s contributions as job creators, economic drivers, and community builders.
“This isn’t just a tax credit—it’s a statement,” said Leslie Perry, Executive Director of the Professional Beauty Association. “It says our industry matters.”
What’s Next?
We know you have questions. That’s why we’re hosting a Live Q&A on Instagram with:
- Leslie Perry, PBA Executive Director
- Myra Reddy, PBA Director of Government Affairs
- Kati Rapoza, PBA Government Affairs Manager
- @probeautyassoc
- Tuesday, July 8 @ 1 PM PST/4 PM EST
They’ll break down exactly what this means for your business, what implementation could look like, and what’s next on PBA’s federal policy agenda.
Thank You, PBA Members—and the Advocates Who Made This Possible
This victory was hard-earned and deeply personal for the PBA team who made it their mission.
For more than a decade, Myra Reddy and Kati Rapoza have worked side by side to bring tax fairness to the beauty industry. Their leadership, strategy, and relentless commitment through missed family time, late nights, hundreds of meetings, and moments when others said it couldn’t be done made this victory real.
They led PBA’s efforts across multiple sessions of Congress, with three different lobbying firms, building coalitions inside and outside the industry, revising messaging, leading Hill visits, and never backing down.
“We believed this was a matter of tax fairness and principle,” said Myra. “This inequity went against what the tax code is meant to do for small businesses. We couldn’t let that stand.”
If You’re a PBA Member: Thank You.
Your support helped fuel this fight—every call, every campaign, every year.
If You’re Not Yet a Member: This is what we do → LEARN MORE
