The FICA tip credit has existed since 1993, but for decades it belonged to restaurants and bars. The 2025 One Big Beautiful Bill Act extended the same credit to beauty and personal care businesses where tipping is customary. The mechanics did not change: a credit of 7.65% of the tips your W-2 staff report, dollar for dollar against income tax, starting with the 2025 tax year. There are no upfront costs and no out-of-pocket money. You pay only if a credit is secured.
Most accountants never mention it because they are not aware of it. The expansion is recent, it arrived inside a very large tax law, and the credit itself spent 30 years associated with restaurants. So salons and spas keep paying the 7.65% employer FICA share on reported tips every pay period, with no offset, simply because nobody told them the money can come back.
The free tip credit estimator has a salon and spa mode if you want a range for your own business first, in about a minute.
Is this the same credit restaurants claim? Yes, the same Internal Revenue Code section 45B credit, extended to beauty businesses for tax years starting with 2025.
Can we claim 2024 or earlier? No. There is no retroactive lookback to years before 2025 for beauty businesses. The claim starts with the 2025 tax year and repeats annually.
What does it cost? The eligibility check is free. There are no upfront costs and no out-of-pocket money. You pay only if a credit is secured. Claims are a pure success fee of 8.75% of the credit recovered. No recovery, no fee.
Free check. 8.75% success fee only. No recovery, no fee.