The Covering Beauty Blog

Everything you need to know about insurance for your beauty business.

Money Talks – FICA Tip Tax for Salons & Spas

Posted July 18th, 2013 by Jeff Pulford

FICA (Federal Insurance Contributions Act) is tax paid by employees and employers to the federal government to fund Social Security and Medicare.  

Our blog this week is passing along information from PBA (Professional Beauty Association), the largest beauty industry association in the U.S.  PBA is urging advocates to support FICA Tip Tax Fairness, as congress is debating tax reform legislation.

“PBA has been an active part of these efforts and in frequent contact with key policymakers in the tax arena to build support for and request that any tax reform proposal include the tip tax credit for the salon industry. This Small Business Equalization and Tax Compliance Act would provide salon owners with a dollar for dollar tip tax credit for FICA taxes paid on employee tips.”                                 -Bridget Sharpe, PBA

In an article in Stylist Newspapers from last year, salon owner Andre Chreky stated:  “Not getting involved is handing over a check every year to the federal government for taxes on money that you, as the employer or business owner, did not earn, do not profit from and that you can’t use to grow your business.”  The article goes on to say, “The professional beauty industry is the second highest tipped industry in the U.S., just behind the restaurant industry. Unfairly, Congress has segmented the restaurant industry by allowing them since 1993 to claim a dollar-for-dollar FICA Tip Tax Credit on employee tip income. Salon and spa owners pay on average $11,000 in taxes per year on employee tip income, income that the owner does not benefit from.”

Read the entire article from Stylist Newspapers or sign the PBA’s letter of support, click here.

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