{"id":17707,"date":"2025-05-23T15:02:14","date_gmt":"2025-05-23T22:02:14","guid":{"rendered":"https:\/\/www.probeauty.org\/?p=17707"},"modified":"2025-05-27T15:42:18","modified_gmt":"2025-05-27T22:42:18","slug":"no-tax-on-tip-update","status":"publish","type":"post","link":"https:\/\/www.probeauty.org\/no-tax-on-tip-update\/","title":{"rendered":"No Tax on Tips and FICA Tip Tax Update"},"content":{"rendered":"\n

The Scoop on No Tax on Tips<\/strong>
A lot has happened- here is a recap.<\/p>\n\n\n\n

We\u2019re getting closer\u2014but we\u2019re not there yet.<\/strong>
There\u2019s been exciting progress on No Tax on Tips and the FICA tip tax credit, but they aren’t law yet.<\/p>\n\n\n\n

Here\u2019s where things stand:<\/strong>
The House Ways and Means Committee included No Tax on Tips in the reconciliation package. The deduction would be temporary, phasing out after 2028. They also included a permanent extension of the FICA tip tax credit for employers to beauty services\u2014a huge win for our industry. That package was passed by the House in the early morning hours on May 22nd<\/sup>.

Separately, in a surprise move on May 20th<\/sup>, the Senate unanimously passed S.129<\/a>, the No Tax on Tips Act, as a standalone bill, which also includes the FICA tip tax credit for employers.<\/p>\n\n\n\n

What does this mean?<\/strong>
It shows that support for this effort is strong and bipartisan. But for these provisions to become law, both the House and Senate must pass the same version<\/strong>\u2014either the full reconciliation package or the standalone Senate bill.<\/p>\n\n\n\n

Now\u2019s the time to speak up: Tell your Members of Congress to pass No Tax on Tips and deliver this long-overdue win for our industry! Take Action below!<\/p>\n\n\n\n

Take Action to support No Tax on Tips: https:\/\/probeauty.quorum.us\/campaign\/124933\/<\/a><\/p>\n\n\n\n

Take Action on FICA Tip Tax Credit: https:\/\/probeauty.quorum.us\/campaign\/124512\/<\/a><\/p>\n\n\n\n

FAQ<\/strong><\/p>\n\n\n\n

What does No Tax on Tips actually mean in plain language?<\/strong><\/p>\n\n\n\n

No tax on tips means that service providers (employees AND independent contractors) receive a tax deduction eliminating federal income taxes on tips. The amount of income they pay taxes on is reduced by the amount of tip-income they earn. Only tips reported to the employer and noted on a worker\u2019s W-2, their end-of-year tax summary, would qualify. Payroll taxes, which pay for Social Security and Medicare, would still be collected along with state and local taxes. Highly compensated workers are ineligible. For 2025, $160,000 is the threshold for a highly compensated worker.<\/p>\n\n\n\n

I heard the bill only includes cash tips. What\u2019s up with that?<\/strong><\/p>\n\n\n\n

According to the IRS, cash tips include tips received directly from customers, tips from other employees under any tip-sharing arrangement, and charged tips (for example, credit and debit card charges) distributed to the employee. You can read references to cash tips from the IRS here<\/a> and here<\/a>. Non-cash tips would include things like tickets, or other items of value.<\/p>\n\n\n\n

What is the FICA tip tax credit?<\/strong><\/p>\n\n\n\n

The 45B FICA tip tax credit is a dollar-for-dollar tax credit for employers on the FICA taxes they pay on employee tip income. FICA taxes fund Social Security and Medicare, so it is important for workers to claim tips to be able to receive that money in retirement. However, employers don\u2019t keep any of the tip income so reporting their employees\u2019 tips actually costs them money (we\u2019re talking about thousands of dollars every year). There is an existing <\/em>credit in the IRS code that was created in 1993 and accounts for this, but our industry has never had access to it because of the way it was written. Finally, being able to reclaim these funds every year will allow employers to invest more in their businesses and employees, which is a win for everyone.<\/p>\n\n\n\n

Still have questions? Email PBA\u2019s government affairs manager, Kati Rapoza kati@probeauty.org<\/a><\/p>\n\n\n\n

Want to spread the word? Click below to take action on No Tax on Tips and FICA Credit. Post the flyers for your team to take action!! <\/p>\n\n\n\n

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Take Action on No Tax on Tips<\/a><\/div>\n<\/div>\n\n\n\n
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Take Action on FICA Credit<\/a><\/div>\n<\/div>\n\n\n\n
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NTOT Flyer<\/a><\/div>\n<\/div>\n\n\n\n
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FICA Flyer<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Scoop on No Tax on Tips A lot has happened- here is a recap. We\u2019re getting closer\u2014but we\u2019re not…<\/p>\n","protected":false},"author":16,"featured_media":17712,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[16,1],"tags":[106,107,139,111],"insight_type":[],"class_list":["post-17707","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government-affairs","category-uncategorized","tag-advocacy","tag-government-affairs","tag-pba","tag-press-release"],"acf":[],"yoast_head":"\nNo Tax on Tips and FICA Tip Tax Update | Pro Beauty Association<\/title>\n<meta name=\"description\" content=\"Here\u2019s where things stand: The House Ways and Means Committee included No Tax on Tips in the reconciliation package. The deduction would be temporary, phasing out after 2028. They also included a permanent extension of the FICA tip tax credit for employers to beauty services\u2014a huge win for our industry. That package was passed by the House in the early morning hours on May 22nd. Separately, in a surprise move on May 20th, the Senate unanimously passed S.129, the No Tax on Tips Act, as a standalone bill, which also includes the FICA tip tax credit for employers. The 45B FICA tip tax credit is a dollar-for-dollar tax credit for employers on the FICA taxes they pay on employee tip income. FICA taxes fund Social Security and Medicare, so it is important for workers to claim tips to be able to receive that money in retirement. However, employers don\u2019t keep any of the tip income so reporting their employees\u2019 tips actually costs them money (we\u2019re talking about thousands of dollars every year). There is an existing credit in the IRS code that was created in 1993 and accounts for this, but our industry has never had access to it because of the way it was written. Finally, being able to reclaim these funds every year will allow employers to invest more in their businesses and employees, which is a win for everyone.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.probeauty.org\/no-tax-on-tip-update\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"No Tax on Tips and FICA Tip Tax Update | Pro Beauty Association\" \/>\n<meta property=\"og:description\" content=\"Here\u2019s where things stand: The House Ways and Means Committee included No Tax on Tips in the reconciliation package. The deduction would be temporary, phasing out after 2028. 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There is an existing credit in the IRS code that was created in 1993 and accounts for this, but our industry has never had access to it because of the way it was written. 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The deduction would be temporary, phasing out after 2028. They also included a permanent extension of the FICA tip tax credit for employers to beauty services\u2014a huge win for our industry. That package was passed by the House in the early morning hours on May 22nd. Separately, in a surprise move on May 20th, the Senate unanimously passed S.129, the No Tax on Tips Act, as a standalone bill, which also includes the FICA tip tax credit for employers. The 45B FICA tip tax credit is a dollar-for-dollar tax credit for employers on the FICA taxes they pay on employee tip income. FICA taxes fund Social Security and Medicare, so it is important for workers to claim tips to be able to receive that money in retirement. However, employers don\u2019t keep any of the tip income so reporting their employees\u2019 tips actually costs them money (we\u2019re talking about thousands of dollars every year). There is an existing credit in the IRS code that was created in 1993 and accounts for this, but our industry has never had access to it because of the way it was written. Finally, being able to reclaim these funds every year will allow employers to invest more in their businesses and employees, which is a win for everyone.","breadcrumb":{"@id":"https:\/\/www.probeauty.org\/no-tax-on-tip-update\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.probeauty.org\/no-tax-on-tip-update\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.probeauty.org\/no-tax-on-tip-update\/#primaryimage","url":"https:\/\/www.probeauty.org\/wp-content\/uploads\/2025\/05\/Untitled-design-6.png","contentUrl":"https:\/\/www.probeauty.org\/wp-content\/uploads\/2025\/05\/Untitled-design-6.png","width":1080,"height":1350},{"@type":"BreadcrumbList","@id":"https:\/\/www.probeauty.org\/no-tax-on-tip-update\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.probeauty.org\/"},{"@type":"ListItem","position":2,"name":"No Tax on Tips and FICA Tip Tax Update"}]},{"@type":"WebSite","@id":"https:\/\/www.probeauty.org\/#website","url":"https:\/\/www.probeauty.org\/","name":"Pro Beauty Association","description":"Professional Association For The Beauty Industry","publisher":{"@id":"https:\/\/www.probeauty.org\/#organization"},"alternateName":"PBA","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.probeauty.org\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.probeauty.org\/#organization","name":"Pro Beauty Association","alternateName":"PBA","url":"https:\/\/www.probeauty.org\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.probeauty.org\/#\/schema\/logo\/image\/","url":"https:\/\/www.probeauty.org\/wp-content\/uploads\/2023\/07\/professional-beauty-association-logo-dark.png","contentUrl":"https:\/\/www.probeauty.org\/wp-content\/uploads\/2023\/07\/professional-beauty-association-logo-dark.png","width":622,"height":194,"caption":"Pro Beauty Association"},"image":{"@id":"https:\/\/www.probeauty.org\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/professionalbeautyassociation","https:\/\/x.com\/probeautyassoc"]},{"@type":"Person","@id":"https:\/\/www.probeauty.org\/#\/schema\/person\/36791db464ce7f0265223861a3abe848","name":"Blessly Thomas","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.probeauty.org\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/a9a073bd34a323fb1ee152038df3c8f7d827363c4836e3cc32d9e39bbf4c685d?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/a9a073bd34a323fb1ee152038df3c8f7d827363c4836e3cc32d9e39bbf4c685d?s=96&d=mm&r=g","caption":"Blessly Thomas"}}]}},"_links":{"self":[{"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/posts\/17707","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/comments?post=17707"}],"version-history":[{"count":13,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/posts\/17707\/revisions"}],"predecessor-version":[{"id":17743,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/posts\/17707\/revisions\/17743"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/media\/17712"}],"wp:attachment":[{"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/media?parent=17707"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/categories?post=17707"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/tags?post=17707"},{"taxonomy":"insight_type","embeddable":true,"href":"https:\/\/www.probeauty.org\/wp-json\/wp\/v2\/insight_type?post=17707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}