2025 marks a major leap forward for the beauty industry with the passing of the Big Beautiful Bill, thanks to years of advocacy by the PBA. Two major provisions—the FICA Tip Tax Credit expansion and the No Tax on Tips Act—bring long-overdue tax relief to salon owners, employees, and independent professionals.

Here’s what it means for you:

Booth renters or sole proprietors: You already report all income, including tips, and pay both the employer and employee portion of Social Security and Medicare taxes. While the FICA Tip Tax Credit applies only to employers, the No Tax on Tips Act could allow you to deduct up to $25,000 in tip income from your federal taxable income (through 2028).

Employees in salons: Your employer withholds payroll taxes from your wages and tips. Under the new law, you may deduct up to $25,000 in tip income from your federal taxes if you meet income requirements—potentially boosting your refund.

Salon owners with employees: You can now claim the FICA Tip Tax Credit—a dollar-for-dollar credit on the employer portion (7.65%) of Social Security and Medicare taxes paid on reported tips—reducing your tax liability and freeing up funds to reinvest.