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Beauty Salon Owners Envision a More Attractive Way to Tax Tips

Beauty Salon Owners Envision a More Attractive Way to Tax Tips
Photograph by Win Initiative/Getty Images

An industry group representing beauty salons and stylists wants to change the way the government taxes tips earned in the beauty industry. It says its proposal would raise revenue for the federal government by getting taxpayers to report more income.

Today, Marc Heller lays out the Professional Beauty Association’s argument in Bloomberg BNA (subscription required): Under current law, salon owners pay Social Security and Medicare taxes on workers’ tips, even though the income often passes directly from customer to employee. Salon owners process tips paid for with credit cards, but don’t retain income on the transactions.