Unfair Taxation in Salons and Barbershops: A Call for Equality

The Challenge of Unfair Taxation for Salons and Barbershops

Salons and barbershops are facing significant tax burdens that their counterparts in other industries don’t encounter. Despite being the second-highest tipped industry, beauty establishments wrestle with the inequities in the tax code. For instance, in 1993, Congress allowed restaurants to claim a tip tax credit, leaving salons behind.

The Financial Impact of Current Tax Policies

• Salon owners often incur additional costs from employee tips due to federal income tax and other fees.
• For instance, a typical $20 tip costs the salon an extra $2 due to federal and state taxes.
• This compounded burden affects over 100,000 small businesses, many of which are struggling to stay afloat.

The Bipartisan Solution: Small Business Tax Fairness Act

A bipartisan bill, the Small Business Tax Fairness and Compliance Simplification Act, is proposed to align tax treatment between salons and restaurants. Advocates, including Rep. Darin LaHood and Rep. Lloyd Smucker, stress its importance for women and minority-owned businesses.

Empowering the Beauty Industry

Understanding that salons provide vital community services, passing this legislation can help salons reinvest in their businesses. The beauty industry employs 1.3 million workers, the majority being women, highlighting its economic significance.

As Congress deliberates on tax equity, it’s essential for all members to support this initiative, ensuring that salons and barbershops receive fair treatment similar to the restaurant sector.