US SB1998

Extends the existing employer tax credit for Social Security taxes paid on employee tips (Section 45B) to beauty service establishments, including barbering, hair care, nail care, esthetics, and body/spa treatments, effective for taxable years after December 31, 2024

Requires beauty service employers to have reported tips exceeding 15% of gross receipts from beauty services to qualify for the tip tax credit

Creates a safe harbor protecting beauty service employers from IRS tip examinations if they establish employee tip reporting education programs, maintain monthly tip reporting procedures for tips of at least $20, and keep employee records for at least 4 calendar years

Requires businesses receiving $600 or more in rental payments from two or more beauty service providers leasing space (booth renters) to file information returns with the IRS and provide statements to renters by January 31, effective for payments after December 31, 2025

Updates the minimum wage calculation for the food and beverage tip credit to remain frozen at January 1, 2007 levels while allowing the beauty service credit to use current minimum wage rates