Washington, D.C. – Congressman Darin LaHood (IL-16) was joined by Congresswoman Suzan DelBene (WA-01) in reintroducing the Small Business Tax Fairness and Compliance Simplification Act. This legislation extends the Federal Insurance Contribution Act (FICA) tax tip credit to employer-based salon and beauty service establishments.
“Small businesses are the backbone of the United States economy,” said Rep. LaHood. “I am proud to reintroduce the Small Business Tax Fairness and Compliance Simplification Act alongside Congresswoman DelBene to level the playing field for beauty salons who rely on tips for a large portion of their income. This bipartisan, commonsense piece of legislation simplifies our tax system for these small business owners and their employees while supporting job creation in central and northwestern Illinois.”
“The beauty industry is largely comprised of small businesses, predominantly owned by women and women of color, with workers who rely heavily on tips. Unfortunately, our tax code does not treat the salon industry the same as other tipped industries that enjoy a fairer and simpler tax administration,” said Rep. DelBene. “Extending this tax relief to the beauty industry would provide parity with other industries, like food service, that already have the ability to take advantage of this credit. This bipartisan legislation would bring commonsense tax relief to salons and their workers, support women-owned businesses, and expand our middle class.”
"The Professional Beauty Association proudly supports The Small Business Tax Fairness and Compliance Simplification Act, a critical measure that levels the playing field for beauty industry employers, most of whom are small, Main Street businesses,” said Leslie Perry, PBA’s Executive Director. “We commend Congressman LaHood and Congresswoman DelBene for their leadership in advocating for fair and equitable tax policies. This legislation will provide much-needed tax relief that directly benefits small businesses and their hardworking employees across America. In addition, it complements the No Tax on Tips initiative, ensuring that beauty professionals receiving the full value of their hard-earned income does not unfairly burden their employers. We look forward to collaborating with Congressman LaHood to ensure this vital legislation becomes a reality for the industry’s employers this year."
Background:
The FICA tax tip credit is currently available to the food service industry, but not extended to the beauty industry, where many employees also rely on tips.
The FICA tax tip credit is part of an integrated compliance system that has been effective in ensuring the accurate reporting of tip income and reducing the tax gap. The credit acts as a reimbursement for the costs employers incur in accounting for tipped income. Extending the FICA tax tip credit reduces tax burdens and improves the reporting of tip income, as it did in the food and beverage industry. This legislation grants equal treatment to the beauty industry, allowing them to support their employees and grow their businesses.
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