Extension of credit for portion of employer social security taxes paid with respect to employee tips to beauty service establishments

(a) Extension of tip credit to beauty service business (1) In general Section 45B(b) of the Internal Revenue Code of 1986 is amended by striking paragraph (2) and inserting the following new paragraphs: (2) Application only to certain lines of business In applying paragraph (1) there shall be taken into account only tips received from customers or clients in connection with the following services: (A) The providing, delivering, or serving of food or beverages for consumption, if the tipping of employees delivering or serving food or beverages by customers is customary. (B) The providing of beauty services to a customer or client if the tipping of employees providing such services is customary. (3) Limitation on application to beauty services Paragraph (2)(B) shall not apply for purposes of determining the credit allowed under subsection (a) with respect to any taxpayer for any taxable year unless— (A) the aggregate amount of tips taken into account by such taxpayer as an employer for such taxable year under paragraph (1)(A) with respect to services described in paragraph (2)(B), exceeds (B) 15 percent of the taxpayer’s gross receipts with respect to the services described in paragraph (2)(B) for such taxable year.. (2) Beauty service defined Section 45B of such Code is amended by adding at the end the following new subsection: (e) Beauty service For purposes of this section, the term beauty service means any of the following: (1) Barbering and hair care. (2) Nail care. (3) Esthetics. (4) Body and spa treatments.. (b) Credit determined with respect to minimum wage in effect Section 45B(b)(1)(B) of the Internal Revenue Code of 1986, is amended— (1) by striking as in effect on January 1, 2007, and; and (2) by inserting, and in the case of food or beverage establishments, as in effect on January 1, 2007 after without regard to section 3(m) of such Act. (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.