Press Releases

Today, Representatives Suzan DelBene (WA-01) and Darin LaHood (IL-16) reintroduced the Small Business Tax Fairness and Compliance Simplification Act, which expands the Federal Insurance Contribution Act (FICA) tax tip credit to employer-based salons and beauty service establishments. This credit helps ensure accurate reporting of tipped income and reimburses small businesses for continuing to implement reporting systems.

The beauty industry is predominantly comprised of small businesses, the majority of which are owned by women and people of color, and this legislation would provide them much-needed tax relief. Tips are paid as gratuity by a client directly to the worker providing the service. Employers are required to pay FICA taxes on these tips even though they are not involved in the tip transaction and 100 percent of it goes to the employee. Currently, restaurants are able to claim a tax credit for the portion of FICA taxes paid on their employees’ tips, but beauty salons do not have access to the same credit. This legislation would extend the FICA tip credit to the beauty industry creating parity with the restaurant industry. The beauty industry is predominantly comprised of small businesses, the majority of which are owned by women and people of color, and this legislation would provide them much-needed tax relief.

“The beauty industry is largely comprised of small businesses, predominantly owned by women and women of color, with workers who rely heavily on tips. said DelBene. “Extending this tax relief to the beauty industry would provide parity with the restaurant industry, which already has the ability to claim this credit. This bipartisan legislation would bring commonsense tax relief to salons and their workers and support small businesses.”

Small businesses are the backbone of the United States economy,” said LaHood. “I am proud to reintroduce the Small Business Tax Fairness and Compliance Simplification Act alongside Congresswoman DelBene to level the playing field for beauty salons who rely on tips for a large portion of their income. This bipartisan, commonsense piece of legislation simplifies our tax system for these small business owners and their employees while supporting job creation in central and northwestern Illinois.”

"The Professional Beauty Association proudly supports The Small Business Tax Fairness and Compliance Simplification Act, a critical measure that levels the playing field for beauty industry employers, most of whom are small, Main Street businesses,” said Leslie Perry, PBA’s Executive Director. “We commend Congressman LaHood and Congresswoman DelBene for their leadership in advocating for fair and equitable tax policies. This legislation will provide much-needed tax relief that directly benefits small businesses and their hardworking employees across America. In addition, it complements the No Tax on Tips initiative, ensuring that beauty professionals receiving the full value of their hard-earned income does not unfairly burden their employers. We look forward to collaborating with Congressman LaHood to ensure this vital legislation becomes a reality for the industry’s employers this year.

A copy of the bill text can be found here.