Barbers, hairdressers, cosmetologists, manicurists and pedicurists, skincare specialists, makeup artists and threading and waxing technicians are all in the personal appearance group of the Treasury's tipped occupations list. Card tips, cash tips and app tips can all qualify if the client chose to leave them.
| How you work | How tips are reported | Extra rule |
|---|---|---|
| Employee (W-2) | W-2, box 12 code TP from 2026 | None beyond the basics |
| Commission employee | W-2, box 12 code TP | Commissions aren't tips; only client tips count |
| Booth renter or suite owner (1099) | Your records, Forms 1099-K | Limited to net profit from your business |
Examples for 2026
- Barber, employee, single, $42,000 income, $10,000 of tips: deduction $10,000, federal tax saved about $1,200.
- Booth-renting stylist, single, $46,000 income, $12,000 of tips but $9,000 of net profit: deduction limited to $9,000, saving about $1,080.
Tips for the salon
- Report every tip, including cash, to your employer or record it yourself. Unreported tips can't be deducted.
- If the salon adds an automatic service charge, that part isn't a tip.
- Booth renters: keep receipts for rent, products and tools; they set your profit limit.
Run your numbers in the tips calculator.
Common questions
Do hairstylists qualify for no tax on tips?
Yes. Hairdressers, hairstylists and cosmetologists are on the Treasury's list of tipped occupations.
I rent a booth. Can I claim it?
Yes, as a self-employed worker. The deduction can't be more than your net profit from the business.
No tax on tipsDeduct up to $25,000 of qualified tips.Open calculatorAll four togetherSee your total Schedule 1-A savings in one place.Open calculator
Sources
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