For a salon or spa, the tip credit is worth 7.65% of the tips your staff report, credited dollar for dollar against income tax. A salon with $150,000 in reported tips qualifies for about $11,475 for the year, and one with $300,000 in reported tips qualifies for about $22,950. The credit then repeats every year your team reports tips. There are no upfront costs and no out-of-pocket money. You pay only if a credit is secured.
The math is the same for every beauty business: reported tips for the year, multiplied by 7.65%, the employer share of FICA tax. These examples are illustrative; your exact credit comes from your payroll records and qualifying wages.
| Reported tips in one year | Credit for that year |
|---|---|
| $150,000 | about $11,475 |
| $300,000 | about $22,950 |
Beauty businesses claim starting with the 2025 tax year and every year going forward, including prior years where the law allows. Because the credit applies annually, a mid sized salon is typically looking at five figures back every single year, not a one time payment.
Most accountants never mention it because they are not aware of it. The credit lived in the food and beverage world for decades, and its 2025 expansion to beauty and personal care businesses is still new enough that many salons and spas have never been told they qualify. Meanwhile, every pay period, the salon pays the 7.65% employer FICA share on reported tips with no offset. The credit gives that money back.
How is the credit calculated? Multiply a year of reported tips by 7.65%, the employer share of FICA tax. The exact figure comes from payroll records and qualifying wages, which the free eligibility check reviews.
Which years can we claim? The 2025 tax year and every year forward, including prior years where the law allows.
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.