# FICA tip credit

A tax credit for the Social Security tax an employer pays on its staff's tips.

It counts only the tips above what an employee needs to reach the federal minimum in cash wages, and only where tipping is customary. That was food and beverage service alone until 2025, when barbering and hair care, nail care, esthetics, and body and spa treatments joined it. A restaurant measures against the minimum wage as it stood in January 2007, so nearly all of its tip tax counts. The credit runs on tax paid for employees, so a shop of booth renters earns none of it, and no deduction is allowed for the same amount. Read whether the seller claimed it: a salon that has not is leaving cash behind, and a restaurant's earnings may already include it.

In numbers: A salon whose staff earn at least the minimum wage in cash and report $200,000 of tips a year pays $15,300 of employer tax on them at 7.65%, and the credit can return all of it.

Source: https://searchspheresource.com/glossary/fica-tip-credit
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt