Quick answer
If you rent a booth or chair, or run your own salon or barbershop, you’re self-employed. You can deduct booth rent, tools, products, licenses, education, insurance, marketing and booking software on Schedule C.
From 2025 to 2028 you may also qualify for the new tips deduction: up to $25,000 of qualified tips a year off your taxable income. Hairstylists and barbers are on the IRS list of tipped occupations.
Booth renter or employee?
- Booth or chair renter: you pay the salon rent, set your own prices and hours, buy your own products and get paid by your clients. You’re self-employed, you pay self-employment tax, and everything below applies.
- Commission employee (W-2): the salon withholds taxes. You can’t deduct work expenses on your federal return, but you can still claim the tips deduction.
What stylists and barbers can deduct
| Expense | Deductible |
|---|---|
| Booth or chair rent, suite rent | 100% |
| Shears, clippers, trimmers, dryers, flat irons | 100% (de minimis if $2,500 or less each) |
| Sharpening and tool repairs | 100% |
| Color, chemicals, backbar products | 100% |
| Retail products you sell | As cost of goods sold when sold |
| Capes, towels, disinfectant, gloves, foils | 100% |
| Laundry service for salon towels | 100% |
| Cosmetology or barber license renewal | 100% |
| Advanced education: color, cutting, extensions classes | 100% |
| Trade shows (travel, hotel, 50% of meals) | 100% except meals |
| Liability and professional insurance | 100% |
| Booking and payment apps (Vagaro, GlossGenius, Square, Booksy) | 100%, including card processing fees |
| Marketing: Instagram ads, business cards, website | 100% |
| Phone | Business-use % |
| Mileage to clients (mobile or on-location stylists, weddings) | 72.5¢/mile Jan to Jun 2026; 76¢ from July |
| Accountant and tax software | 100% |
Not deductible: your own haircuts and color, everyday clothing (even black clothes the salon requires), and your commute to the salon.
The tips deduction (2025 to 2028)
The One Big Beautiful Bill Act created a deduction for qualified tips:
- Up to $25,000 per year.
- Phases out once modified AGI exceeds $150,000 ($300,000 for joint filers).
- Available whether you itemize or take the standard deduction.
- Married couples must file jointly. You need a valid Social Security number.
- Self-employed: the deduction can’t exceed your net profit from the business where you earned the tips.
Important limits:
- It reduces income tax only. Tips are still subject to self-employment tax (or Social Security and Medicare if you’re an employee).
- Tips must be voluntary. A mandatory service charge added to the bill doesn’t count.
- You must report the tips as income. Keep records of cash and card tips. Payment apps usually show card tips separately.
Worked example
Marco rents a chair in a barbershop. In 2026 he earns $62,000 in service revenue plus $14,000 in tips.
| Deduction | Amount |
|---|---|
| Chair rent ($250/week) | $13,000 |
| Clippers, trimmers, shears | $1,100 |
| Products and supplies | $2,400 |
| Booking app and card fees | $1,900 |
| License, education and trade show | $1,200 |
| Insurance | $400 |
| Phone (60%) | $600 |
| Total Schedule C expenses | $20,600 |
- Net profit: $76,000 − $20,600 = $55,400. Self-employment tax is calculated on this.
- Tips deduction: $14,000 off his taxable income on top of the standard deduction.
Together, the business expenses and the tips deduction save Marco roughly $7,000 in income and self-employment tax.
Keep good records
- Keep a daily log of cash tips and save your payment app reports.
- Save receipts for products and tools. A dedicated business bank account or card makes this easy.
- Keep your booth rental agreement.
Frequently asked questions
Do I have to report cash tips?
Yes. All tips are income. Reporting them is also what lets you claim the tips deduction.
Can I deduct the products I sell to clients?
Yes, as cost of goods sold, when you sell them. Products you use on clients are supplies.
Are salon suites different from booth rent?
Not for taxes. Suite rent is fully deductible as rent.
Can a W-2 stylist deduct tools?
Not on the federal return, though some states allow it. Ask your salon about a tool allowance.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Related guides
- Self-Employed Tax Deductions: The Complete List (2026)
- Home Office Deduction: Simplified vs Regular Method
- Car Expenses for Self-Employed: Mileage vs Actual Expenses
- Can I Deduct My Phone and Internet Bill as a Freelancer?
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
Sources
IRS: What the no tax on tips deduction means for you; NATP: Who makes the cut for no tax on tips; IRS Publication 334, Tax Guide for Small Business; IRS 2026 standard mileage rate. Example figures are FreelancerTaxHQ illustrations.
Official resources linked in this guide: IRS: Self-Employment Tax; IRS: Tax preparer credentials.