The Professional Beauty Association (PBA), the largest and most inclusive national trade organization representing the professional beauty industry, sent a letter to Congress today urging lawmakers to extend the 45B FICA tax tip credit to the beauty industry before adjourning this year. The letter, which currently has nearly 4,000 signatures, urgently requests Speaker Pelosi and Leaders Schumer, McCarthy and McConnell to include the FICA Tax Tip Credit in the “Year End Bill.”
Like the restaurant industry, which was granted this credit in 1993, salon and spa professionals receive a significant amount of their income through tips, which by law must be reported as income. Salon and spa owners do not receive any of this tip income yet are required to pay 7.65% FICA taxes on all employee income, including customer-paid tips. While both restaurants and salon and spa industries share similar tip reporting burdens, salon owners continue to carry the burden of paying FICA taxes on the tip income of their employees.
Salons and barbershops comprise the second largest industry with tipped employees. The beauty industry employs women and minorities at a rate two times higher than the national average. More than 85 percent of industry professionals are women. The majority of industry establishments are small businesses, with 83 percent employing less than 10 individuals. Extending the existing 45B credit would address an inequity that has existed for almost thirty years, create parity with the largest tip industry and allow these small business employers to redeploy these savings to further support their employees and expand their businesses.
Members of the professional beauty community continue to voice their support of this legislation and the impact it would have on their businesses. Paige Garland of Rachel’s Salon & Day Spain Memphis, Tennessee, shares, “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 receive 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.”
The 45B FICA Tax Tip Credit for Salons is bipartisan, bicameral legislation which directly helps women, minorities, and small business owners while shrinking the tax gap and increasing tip reporting compliance. Employment-based salons have been subject to unfair disparities in the tax code for decades.
Lisa Lane of Lisa’s of Annapolis Salon in Annapolis, Maryland, states, “I feel that the passing of legislation 45B FICA Tax Tip Credit would ensure Women, Minorities and Salon owners like myself to not be penalized for reporting employees income on customer based tips. The credit would allow us to expand our businesses, hire new talent and help with training so that our businesses can thrive.”
Echoes Edwin Neill of Neill Corp in Hammond, Louisiana, “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.”
PBA has been responsible for championing this issue by continuing to meet with members of Congress and funding all costs for lobbying and legal fees. Shares PBA Government Affairs Director Myra Reddy, “Our members have advocated for access to this important compliance tool for decades. It’s time for Congress to extend 45B to our salon employers and help them retain their employees and afford their share of FICA taxes.”
To learn more about this bill and how you can get involved, visit https://probeauty.org/fica/.
To view and sign the letter sent to Congress, visit https://www.probeauty.org/docs/default-source/advocacy-documents/fica/beautyindustryletter.pdf
For more information on the Professional Beauty Association or to join now visit probeauty.org.
About Professional Beauty Association
The Professional Beauty Association (PBA) is the largest and most inclusive trade organization representing the entire beauty industry. PBA exists to elevate, unite and serve the beauty industry and the professionals who improve people’s lives and is the only national organization to represent the entire beauty industry. Our members include manufacturers, distributors, salons, spas, schools, independent practitioners, students and industry suppliers. PBA is dedicated to advocating and fighting for the rights of the beauty industry, enhancing professionalism, and committed to the long-term success of the stylist and the businesses that employ and support them. For more information on membership levels and dues please visit: www.probeauty.org/join.