The Senate is debating President Trump’s "big, beautiful bill," legislation that would rewrite our tax code. The bill does a lot. But beauty salons are most excited about the way the bill ends taxes on tips, both for stylists and for the salons that employ them.
Fiona Tolunay
The Senate should keep those provisions in the bill and send it to the president’s desk for his signature.
One of Trump’s most popular campaign promises last year was his proposal to end taxation of tips. Millions of tipped workers rallied to this message. Millions of other people also supported the idea as a means of promoting tax fairness for working Americans. The "big, beautiful bill" would make this exciting promise a reality.
Its “no tax on tips” proposal would have a significant effect on small businesses, helping to grow and create more jobs. The proposal would ensure that the IRS treats tips at hair salons the same as it treats trips at restaurant.
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Currently, hair salons and barbershops are required to cover payroll taxes on tips to their employees — even though the salon never receives the actual tip income. This makes no sense, and it has a major effect on small businesses that must cover the cost from their cash flow.
We love what we do, and we appreciate it when people tip our stylists. But those tips ultimately end up costing us money. A $20 tip, with swipe fees, leads to a $2 increase in our tax bill at the end of the quarter. This adds up quickly, and the added cost reduces our ability to hire and invest.
A bipartisan Congress 30 years ago recognized this was a problem for restaurants because servers depend heavily on tips for the majority of their income. Congress passed a tax bill that gave a tax credit to restaurants to offset their payroll tax on tips. This ensured that Social Security and Medicare stayed fully funded while also helping restaurants hire and expand.
The tax bill was a success, and the restaurant business remains strong 30 years later.
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Hair stylists and barbers are just as dependent on tips as servers. Yet beauty industry employees have received no tax break from Congress.
Our businesses are small — like most hair salons and barbershops — and every dollar counts. Our tax fairness issue may seem small in the context of trillion-dollar legislation. But it will have a significant effect on our ability to serve our communities. It would allow us to keep more money in our communities and stimulate our economies, rather than sending it off to Washington.
Recent years have been difficult for many industries, but particularly for barbershops and hair salons. During the worst of the pandemic, up to half of all men stopped going to their barber. And after the pandemic, we were hit with the worst inflation in a generation. Meanwhile, we had to pay taxes on income we never received.
Now, relief is almost here. We need the Senate to get the bill across the finish line.
Many great ideas are in the big, beautiful bill, and the Senate debate will be spirited. Our message to senators is this: As you debate the merits of the legislation, remember the tens of thousands of small businesses in the beauty industry — and keep the beauty industry in the big, beautiful bill.
