The FICA Tip Credit is one of GMG’s Specialized Incentives services designed to recover payroll tax dollars already paid by tipped-industry employers. This program allows eligible businesses to claim a dollar-for-dollar federal tax credit for the employer portion of Social Security and Medicare taxes paid on employee tips.

This incentive transforms reported tips from a payroll liability into a recurring federal tax asset for qualified employers.

What Is It?

When a business's employees earn tips, they're required to pay 7.65% in Social Security and Medicare taxes on that money. The FICA Tip Credit gives that money back — as a dollar-for-dollar federal tax credit.

What’s New?

A new law called the One Big Beautiful Bill Act (OBBBA) permanently expanded this credit in 2025. Before that, only restaurants could claim it. Now it includes:

  • Hair & Nail Salons

  • Spas & Massage Studios

  • Barbershops

  • Beauty & Personal Services

  • Hospitality Guest Services

  • Delivery Services

If a business's employees earn and report tips — and they've been paying payroll taxes on that income — they may be eligible to claim refunds going back to 2025.

Minimum Requirements

A U.S.-based business that:

  • Employs tipped workers

  • Reports tips through payroll

  • Pays employer FICA taxes

  • Files federal business tax returns

  • Has payroll history for analysis


Get your Clients started using your landing page now. GMG handles all analysis, documentation, IRS compliance, and calculation. We coordinate with the business’s CPA for seamless filing. No upfront fees. No complexity. Just results.