Tax Return Changes for Salons and Personal Care | HelloBooks Stylists, barbers and nail techs may qualify for the tips deduction, whether employees or booth renters. What salon clients need to track.
Salons mix employees, booth renters and owner-operators, and each group is treated differently under the new tips rules. Getting the worker status right comes first.
Free Plan with invoices within 200 transactions, bills & quotes — no credit card.
Tips deduction, up to
$25,000 a year
Applies: 2025 to 2028From IRS.gov · checked October 10, 2026
Personal appearance and wellness occupations have their own code group on the Treasury list. A booth renter who is self-employed can claim the tips deduction, but it cannot exceed the net income of their business.
Contractor payments made by the salon from 2026 are reported on 1099-NEC only from $2,000, up from $600 for 2025 payments.
For booth renters, keep tips, service income, product sales and chair rent in separate accounts, so the net income cap for the deduction is easy to show. For the salon owner, HelloBooks tracks each contractor against the 1099 threshold and holds the W-9 details you will need in January.
The plain-English summary for business owners
Schedule 1-A · qualified tips
Payroll and information returns · tipped occupations
Information returns · payments from 2026
General information for tax professionals, not advice on a specific return. Figures are from IRS.gov on the date shown; check the current IRS instructions before filing.
Free Plan with full access to the AI accountant — no credit card, no time limit.