TL;DR: Congress is finalizing the One Big Beautiful tax bill this week. Personal care businesses were this close to getting the same FICA tip credit restaurants have had for decades—until they were unexpectedly cut from the Senate’s latest draft. Immediate action is crucial—here’s why 45B matters and how you can help.

Dear Boulevard Community,

At Boulevard, our mission is to elevate the personal care industry through technology, advocacy, and unwavering support. Right now, that support means fighting urgently for fair tax treatment for salons, barbershops, and spas. Here’s the current situation—and why your immediate action is critical.

What Is 45B—and Why Should You Care?

Section 45B, or the FICA Tip Credit, allows employers to claim a dollar-for-dollar credit against the 7.65% FICA tax they pay on employee tips.

For over 30 years, since 1993, restaurants have enjoyed this credit, avoiding payroll taxes on tips passed directly to their employees. This effectively means restaurants aren’t taxed on money they never earn. However, personal care businesses are excluded from this benefit, despite processing tips identically. Salon, barbershop, and spa owners end up paying thousands annually in taxes on income they never actually receive.

For more detail, see our earlier explainers:

• 5 Things Salon Owners Must Know About the FICA Tax Tip Credit

• FICA Tax Credits for Salons, Barbershops, and Spas

This Has Been Years in the Making

For over 15 years, the Professional Beauty Association (PBA) has been advocating tirelessly for this fairness fix. For the past three years, I’ve personally collaborated closely with them—traveling to Washington D.C., meeting lawmakers, and sharing the real, human impact of this unfair tax policy.

Earlier this year, both the House and Senate finally agreed to extend the 45B credit to the beauty industry in their proposed tax packages—marking the closest we've ever come to achieving fairness.

But Beauty Just Got Snipped

Last week, the Senate released a new draft bill. Although it retained the beneficial “No Tax on Tips” provision—protecting employee tips from federal income tax—it unexpectedly removed the 45B credit for beauty businesses.

Here's why that matters:

• Workers gain from reduced income tax.

• Employers still shoulder the 7.65% payroll tax.

• Owners keep paying taxes on money they never earn.

This is fundamentally unfair and financially unsustainable.

Immediate Action Is Crucial

The Senate is expected to finalize the bill in just days, with only a brief window available to amend it. If we fail to act quickly, beauty businesses will be left to bear the burden indefinitely. We must convince lawmakers now—while they are receptive to changes—to reinstate 45B and ensure fairness.

Why This Matters (A Lot!)

• Fairness: Restaurants have enjoyed this advantage for over 30 years. Beauty is the second-largest tipped industry in America and deserves equal treatment.

• Reinvestment: The 7.65% tax quickly adds up. For example, on a $50 service, that’s about 80 cents—multiplied by hundreds of transactions each week, totaling tens of thousands annually. This money could directly fund wages, training, or employee benefits.

• Compliance: Without relief, many businesses resort to awkward workarounds like QR codes or Venmo, undermining W-2 benefits and complicating tax compliance.

Real Stories, Real Stakes

Many Boulevard customers currently avoid handling tips through their POS—not by choice, but necessity. Some have reduced employee health benefits or reconsidered their ability to maintain W-2 employment. Others are reluctantly shifting to “chair rental” models just to keep their doors open.

Boulevard’s Letter to the Senate

Today, I sent a formal letter to Chairman Crapo and Majority Leader Thune, urging them to restore the 45B credit. Our letter makes clear this issue is about basic fairness and small-business survival. Read the full letter below.

What You Can Do Right Now

You don’t need policy expertise—just your voice and your story.

1. Use the Professional Beauty Association’s letter generator to quickly email your legislators: Click here

2. Call your Senators immediately: Use the Find my Legislator tool for their phone numbers. Key talking points:

   • Implementing "No Tax on Tips" without extending the 45B credit will severely harm many small businesses.

   • Increased tip reporting will unfairly burden an industry where 86% of businesses have fewer than 10 employees, 61% of owners are women, and over 50% are minorities.

   • Without this credit, businesses may close, cut employee benefits, shift away from employee-friendly models, or pass costs onto already stretched customers.

3. Post on social media using #FightForFICA and tag your senators. Use the Find my Legislator tool to find their social media handles.

Final Word

Fair tax policy shouldn’t stop at the restaurant door.

Let's ensure salon owners, barbers, estheticians, massage therapists—those who help us look and feel our best—receive the fairness and respect restaurants have enjoyed for decades.

Thank you for standing with this community and acting swiftly.

–Matt

Boulevard’s Letter to Senate Leadership

Prefer a download? Get the PDF file.

June 23, 2025

The Honorable Mike Crapo
Chairman
U.S. Senate Committee on Finance
219 Dirksen Senate Office Building
Washington, D.C. 20510

The Honorable John Thune
Senate Majority Leader
U.S. Senate
511 Dirksen Senate Office Building
Washington, D.C. 20510

REINSTATING 45B FICA TIP TAX CREDIT FOR PERSONAL CARE BUSINESSES

Dear Chairman Crapo and Majority Leader Thune:

As I write, I am mindful that recent global events must be demanding much of the Senate’s attention. Thank you for continuing to address overdue domestic issues during these challenging times as well.

With this in mind, I respectfully urge you to reinstate the provision in the One Big Beautiful Bill that extends the Section 45B FICA tip tax credit to personal care businesses—including salons, barbershops, spas, and nail salons, which collectively represent the second-largest tipped industry after restaurants.

Boulevard is a client experience platform purpose-built for personal care businesses. Our software supports more than 5,000 appointment-based establishments in every state. In the last 12 months, our platform facilitated over $4 billion in sales from more than 20 million appointments, delivered by over 40,000 licensed beauty professionals and 20,000 support staff. This scale gives us a unique window into the financial realities these businesses face and the critical importance of this legislation for business owners, employees, and clients.

Currently, personal care business owners face an unjust tax burden when facilitating gratuities. Owners must pass 100% of tips directly to employees without deductions, yet still pay an additional 7.65% FICA tax on those amounts. Across our platform, the average gratuity is approximately 20.9% of service costs. Practically, for a $50 service, the business owner incurs about 80 cents in tax on income they neither earn nor control. While 80 cents per transaction may seem minor, across hundreds or thousands of weekly transactions, it totals tens of thousands of dollars annually—funds that could otherwise support hiring, reinvestment, or simply keeping the doors open.

Gratuities are not part of a business’s revenue or payroll. Taxing employers on cash they simply pass through fails the basic economic-benefit principle that underpins our tax code. Because tip volume is entirely at clients’ discretion, the expense is impossible to predict. Many businesses, therefore, opt out of tip handling altogether, pushing clients to cash or peer-to-peer apps—an awkward experience that often leaves professionals shortchanged.

Without relief, even more business owners will consider transitioning employees to 1099 contractors or booth rentals to avoid payroll taxes on reported tips. Such changes eliminate essential worker protections—paid leave, minimum wage guarantees, overtime, training, and benefits—making it far harder for professionals to build stable, long-term careers. Alternatively, businesses may be forced to raise prices, further burdening already stretched consumers. None of these outcomes benefits workers, clients, or the long-term health of the personal care industry.

It is also important to note who this credit would support. The professional personal care industry overwhelmingly consists of small, independently owned businesses: over 60% are owned by women, nearly half are owned by minorities, and the broader workforce is 80% female. Reinstating the 45B tip credit would directly aid these entrepreneurs and their employees, promoting economic equity and opportunity nationwide. These businesses deserve the same fair tax treatment that restaurants have enjoyed since 1993.

We are grateful for the Senate’s recent support of the No Tax on Tips Act, which benefits workers directly. Implementing that measure without the complementary 45B employer-side credit, however, would raise tax liabilities for small businesses, potentially harming the very workers the policy aims to help. Adding further strain to enterprises that already operate on thin margins risks undermining compliance and financial stability.

Now is the time to act. The House tax package includes the 45B credit. The Senate unanimously passed Senator Cruz’s S.129, which also included the 45B credit. Senator Tim Scott’s recently introduced S.1998, outlines the credit directly, and assists in making the proposal revenue neutral. Our nation’s personal care businesses, the professionals they employ, and the clients they serve—many of whom are frustrated by needing cash just to leave a proper tip—are counting on your leadership to ensure this essential provision remains in the final bill.

Thank you for your continued advocacy for the small businesses that help each of us look and feel our best.

Sincerely,

/Matthew Danna/

Matt Danna
Co-Founder & Chief Executive Officer
Boulevard Labs, Inc.