House lawmakers have reintroduced proposed legislation to expand the Federal Insurance Contribution Act (FICA) tax tip credit. The bill would expand the credit, currently available to the food service industry, to “employer-based salon and beauty service” establishments. Tips are paid as a gratuity by customers directly to the workers providing the services. Employers are required to pay FICA taxes on these tips even though they’re the sole property of the workers and the employers aren’t involved in the tip transactions. Lawmakers said that expanding the credit to the beauty industry would reduce tax burdens and improve reporting of tip income, as it did in the food and beverage industry.
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