For you / Hair stylists

By NorseHorse. Updated October 16, 2026. General information, not legal or tax advice.

How hair stylists get paid

Commission or hourly at a salon

As a salon employee, you're typically paid a percentage of the services you perform, an hourly wage, or the higher of the two, sometimes with a smaller commission on retail product. The salon withholds taxes and gives you a W-2. Clients tip on top, often on the card at checkout, and those tips usually come through payroll. If you regularly get more than $30 a month in tips, federal law lets an hourly employer count part of your tips toward the minimum wage, the same tip credit restaurants use, where your state allows it. Your state's rules are on the tipped minimum wage page.

If you tip out an assistant or shampooer, you report only the tips you receive and keep. Shampooers have their own spot on the Treasury tip list (code 604), so the tips they get from you can qualify for them too.

Booth rent and salon suites

Renting a booth or a suite usually means you run your own business. You pay rent, set your schedule and prices, buy your own color and product, and keep what clients pay you. Nobody withholds tax. You report your service income and your tips on Schedule C, and pay self-employment tax on the profit.

The gray zone

Some salons pay stylists on a 1099 while setting their hours, prices and products. A written agreement is only one factor. The IRS uses common-law rules grouped as behavioral control, financial control and the relationship of the parties, and either side can ask the IRS to decide with Form SS-8. If you were an employee treated as a contractor, Form 8919 is how you report just your share of Social Security and Medicare. Start with what to do with an unexpected 1099-NEC.

Your 2026 taxes as a stylist

Hairstylists are on the Treasury's list of tipped occupations under code 603, barbers, hairdressers, hairstylists and cosmetologists, with examples including beautician, hair colorist and hair cutter. Your tips can count toward the federal tips deduction: up to $25,000 a year for 2025 through 2028, phasing out once modified adjusted gross income passes $150,000 ($300,000 joint). It lowers income tax, not Social Security, Medicare or self-employment tax.

On commission or hourly (W-2)

When your tips at the salon reach $20 or more in a month, report them by the 10th of the next month. Your 2026 W-2 shows those reported tips in box 12 with code TP and your occupation code in box 14b, and that's the number you deduct. Tips you didn't report only count if you report them yourself on Form 4137. See W-2 box 12 code TP and reporting tips to your employer.

Booth rent or suite (self-employed)

• Tips need a 1099. For 2026, a self-employed person's tip only counts if a payer reports it in a 1099 tip box. A tip a client hands you or adds through your own card reader doesn't qualify unless a form like that shows it. It's still income you report.
• Thresholds. A business only has to send a 1099-NEC when it pays you $2,000 or more, and a payment app only has to send a 1099-K when your payments top $20,000 and 200 transactions.
• Profit cap. The deduction can't be more than your net profit from the business, and it can't create a loss.
• Self-employment tax stays. You owe 15.3 percent on 92.35 percent of your net profit either way.

The full rules are in No Tax on Tips when you're self-employed. Estimate what you'd save with the No Tax on Tips calculator.

Expenses and mileage

If you're self-employed, booth or suite rent goes on Schedule C line 20b, rent for other business property, and other costs count when they're ordinary and necessary for the business, like shears, color and product. If you drive for the business, the IRS standard mileage rate for 2026 is 72.5 cents a mile through June 30 and 76 cents from July 1. Total your miles with the mileage calculator, and plan quarterly payments on your profit.

What to track

• Tips by day, cash and card separately.
• Tip-outs to assistants or shampooers.
• Your commission statements or service totals, to check against each paycheck or your own income.
• Booth or suite rent, product and tool receipts, if you're self-employed.
• Miles to off-site jobs, with the date and purpose.
• Every 1099 you receive, checked against your tip record.

How Cashout helps

Cashout is free, works offline, and doesn't need an account. It's built around shifts and tips, so it covers the tip side of salon work well and the service side only partly.

• Tips and tip-outs. Log each day at the chair as a shift with Cash Tips, Card Tips and Tip Out for what you gave your assistant. On Android and iPhone.
• Work Expenses. Scan a receipt and the text is read on your phone to fill in amount, vendor, date and category, including Booth Rent, Tools and Supplies. On Android and iPhone. See the expense tracker.
• Mileage. Log trips by hand. On Android each trip is valued at the IRS rate for its date and round trips count twice; the current iPhone version uses a flat rate. See the mileage tracker.
• Self-employment tax (Android only). Mark a job as paid on a 1099 and Taxes adds self-employment tax and a quarterly estimate, with business miles and expenses taken off your profit. On iPhone, tax estimates cover W-2 work only. See tax estimates.
• Reports. Shift CSV and PDF exports, and a year-end tax summary PDF with income, estimated tax, mileage and expenses. See reports.

What it doesn't do: there's no field for commission or service sales, and no per-client or per-service tracking, so your service income doesn't get its own line. It doesn't connect to salon booking or payment software. The No Tax on Tips deduction isn't in the app yet.

Common questions

I rent a suite. Do my card tips count for No Tax on Tips?

Only if a payer reports them to you in a 1099 tip box, such as box 1c on a 1099-K. Tips with no 1099 showing them are still taxable, but don't qualify for 2026.

Should I report tips before or after I tip out my assistant?

After. On a W-2 job you report only the tips you receive and keep.

The salon gives me a 1099 but controls my schedule. Am I an employee?

Maybe. The IRS looks at behavioral control, financial control and the relationship as a whole; the agreement is only one factor. You can ask the IRS to decide with Form SS-8.

Track it all with Cashout. Shifts, tips, unpaid breaks, taxes, and mileage, logged in seconds. iPhone · Android