Big news! The One Big Beautiful Bill Act, signed into law on July 4, 2025, includes a game-changing provision called “No Tax on Tips” that directly benefits beauty professionals like you who run your own businesses in our salon suites. This new law makes it easier for you to keep more of your hard-earned money. Letās break it down in simple terms so you know exactly how it works and what it means for you.
The One Big Beautiful Bill Act creates a federal income tax deduction for tips you earn as a beauty professional. This means you can subtract up to $25,000 of your tip income each year from your taxable income when you file your federal taxes. Less taxable income means you pay less in federal income taxes, putting more money back in your pocket!
This provision is specifically designed for workers in “traditionally tipped industries” like oursāthink hairstylists, nail technicians, estheticians, and other beauty pros. Itās effective retroactively from January 1, 2025, and runs through December 31, 2028. So, you can benefit from this tax break starting with your 2025 tax return!
Hereās a simple example to show how this could help you:
Letās say you earn $20,000 in tips in 2025 from your clients at your IMAGE Studios salon suite.
Under the new law, you can deduct all $20,000 of those tips from your taxable income when you file your federal taxes.
This lowers the amount of income the IRS taxes, which could save you hundreds or even thousands of dollars, depending on your tax bracket.
If you earn more than $25,000 in tips, only the first $25,000 is deductible. Any tips above that amount will be taxed as usual. But for most beauty professionals, this $25,000 cap covers the majority of tip income, making it a generous benefit.
You qualify if you:
Work in a tipped occupation (like hairstyling, barbering, nail services, or esthetics).
Earn cash tips from your clients (this includes credit card tips reported to the IRS).
Have an annual income below certain limits:
For single filers, the deduction starts to phase out at $150,000 and is unavailable above $275,000.
For married couples filing jointly, it phases out at $300,000 and is unavailable above $550,000.
Most beauty professionals running their own businesses at IMAGE Studios will easily qualify, as these income limits are quite high.
Keep Reporting Your Tips: You still need to report all your tips to the IRS, just like before. This includes cash and credit card tips. The deduction doesnāt change your reporting requirementsāit just reduces how much of that income is taxed.
Save Records: Keep track of your tips with a daily log or app to make tax time easier. Your IMAGE Studios suite is your business, so good record-keeping is key!
Talk to a Tax Pro: The IRS will release more details soon about what qualifies as a ātraditionally tipped industry.ā A tax professional can help you claim this deduction correctly when you file your 2025 taxes.
Plan Ahead: This deduction is temporary and ends in 2028 unless Congress extends it. Use this opportunity to save or invest the extra money you keep!
Important note: This deduction only applies to federal income taxes. You may still owe state and local income taxes or payroll taxes (like Social Security and Medicare) on your tips, depending on where you live. Check with a tax professional to understand your stateās rules.
As a beauty professional running your own business at IMAGE Studios, every dollar counts. The No Tax on Tips provision is a win for you because it:
Puts more money in your pocket to reinvest in your business, upgrade your suite, or save for the future.
Recognizes your hard work in a tipped industry, where your talent and client relationships drive your success.
Supports small business owners like you, who make up 83% women and nearly half minority-owned businesses in the beauty industry, according to the Professional Beauty Association.
The beauty industry fought hard for this provision, and groups like the Professional Beauty Association helped make it happen. Their advocacy highlighted the unique challenges you face as salon professionals, and it paid off! This law not only saves you money but also shows that your work is valued.
At IMAGE Studios, weāre thrilled to see policies that support our incredible community of beauty professionals. Keep shining in your salon suites, and know that this new tax break is here to help you thrive. If you have questions about how this affects your business, reach out to your tax advisor or CPA for further clarification.Ā
Disclaimer: The information provided in this blog post is for general informational purposes only and does not constitute financial, tax, or legal advice. While we strive to provide accurate and up-to-date information regarding the “No Tax on Tips” provision of the One Big Beautiful Bill Act, tax laws are complex and subject to change. Your eligibility for the deduction, the amount of your tax savings, and your specific tax obligations may vary based on your individual circumstances. We strongly recommend consulting a certified public accountant (CPA), tax professional, or other qualified advisor to ensure compliance with all applicable federal, state, and local tax laws and to receive personalized advice tailored to your situation. IMAGE Studios is not responsible for any actions taken based on the information provided in this post.
