Nail Salons NAICS 812113

Jul 31, 2025 - “No Tax on Tips” Policy Passes

• According to National Public Radio (NPR), tipped workers in the beauty industry will be able to deduct up to $25,000 in tips annually from their taxable income following a provision included in President Trump’s recently signed spending and tax package that passed Congress. After the $25,000 is met, tips will be federally taxed. Also, workers who make more than $150,000 are not eligible for the deduction. According to estimates from the White House, tipped workers are expected to save about $1,700 a year on average. The law will be phased out at the end of 2028, if not extended by Congress. Tipped work is about 2% of all US employment, according to Yale Budget Lab’s Martha Gimbel. Congress has also extended the availability of the 45B FICA tip tax credit to beauty service industry employers, which allows business owners to receive dollar-for-dollar tax credits for their portion of payroll taxes.
• Nail salon services, included in the “Other Services” category, is one of the 10 industries reporting growth in June’s Services ISM Report on Business. Executives in the Other Services industry also reported increased business activity, increased new orders, higher prices, higher inventories, lower employment, and slower deliveries. Industries reporting growth during the period also included Transportation & Warehousing; Utilities; Arts, Entertainment & Recreation; Management of Companies & Support Services; Wholesale Trade; Public Administration; Retail Trade; Information; and Real Estate, Rental & Leasing. The six services industries reporting contraction during the period were Agriculture, Forestry, Fishing & Hunting; Construction; Mining; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Educational Services. Overall, economic activity in the services sector expanded in June, with the Services PMI registering 50.8%.

• The US nail salons industry is projected to grow at a CAGR of 4.94% between 2025 and 2029, faster than the growth of the overall economy, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. Nail salons are part of the “other services” sector, which is driven by consumer spending, along with expenditure by businesses. Consumer sentiment is expected to improve in the forecast period, which bodes well for the sector. Factors that may limit consumer spending are higher tariffs on consumer goods. On a positive note, lower inflation supports a moderate increase of real disposable income by about 2% in 2025 and 1.9% in 2026. Real income could suffer to an extent if average prices rise due to tariff implementation.
• Consumer sentiment, an indicator of discretionary spending, increased slightly in July 2025, rising to 61.8 in preliminary July data from 60.7 in June, according to a report in the Wall Street Journal. The consumer sentiment index from the University of Michigan hit a recent peak in December of 74, buoyed following the presidential election, but dropped to 52.2 in April 2025 as consumers expressed uncertainty about tariff effects and rising inflation. In July, respondents’ inflation expectations for the coming year were an anticipated price increase of 4.4%, which was tracking higher than in January, when respondents expected prices to grow by 3.9%. However, July’s inflation expectation results were lower than June’s, when respondents expected a 5% price increase for the coming year. The index serves as a predictor of consumer spending as it indicates consumers’ perception of their financial prospects and the broader economy.