The VIP Suite at IMAGE Studios with Matthew Landis

No Tax on Tips: A Conversation With Jason Olsen, CEO & Founder of IMAGE Studios

• IMAGE Studios • Season 4 • Episode 32

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In this special episode of The VIP Suite, host Matthew Landis sits down with IMAGE Studios Founder and CEO, Jason Olsen, to break down the recently passed "No Tax on Tips" provision, a major win for independent beauty and wellness professionals. They talk about who qualifies for the deduction and what steps you need to take if you’re eligible. Jason and Matthew address common questions and misconceptions, providing clarity on income limits, reporting requirements, and the importance of tracking your tips and expenses.


This episode is packed with actionable advice to help you make the most of this new law. Learn about the benefits of using tools like GlossGenius for income tracking, why consulting a tax professional is essential, and how this provision could free up more cash for your business or personal goals. Don’t miss out on this timely conversation that could help you save thousands and set your business up for greater success!

The VIP Suite is the official podcast of IMAGE Studios, created for independent beauty, health, and wellness professionals who want to grow their businesses and thrive in salon suite life. Hosted by Director of Education, Matthew Landis, each episode shares real success stories, marketing tips, and business strategies from top beauty entrepreneurs and wellness leaders.

This episode is sponsored by GlossGenius, the all-in-one salon software designed to help independent professionals book appointments, accept payments, manage schedules, and build strong beauty brands. Learn more at glossgenius.com.

Don’t forget to follow, rate, and review the show on Apple Podcasts, Spotify, or wherever you listen. Connect with us on Instagram @imagestudios360 and visit imagestudios360.com for more information about IMAGE Studios luxury salon suites. New episodes drop every two week. Subscribe to hear how beauty and wellness professionals like you are building powerful, independent careers.

Matthew Landis:

Welcome to The VIP Suite, the podcast for Salon Suite professionals who are building bold, brilliant businesses. I'm your host. Matthew Landis, former salon owner, business coach and lifelong advocate for entrepreneurs in the beauty and wellness industry. Each week we spotlight industry MVPs, from hairstylists, estheticians, nail and lash artists and a wide array of solo entrepreneurs who are creating success on their own terms, you'll hear strategies for marketing, client, growth mindset and overall Salon Suite success, plus honest conversations about what it really takes to thrive. This season, we're going even deeper into growth, grit, community and all the messy magic that comes with carving your own path. So hit subscribe, turn up the volume, and welcome to The VIP Suite where independent beauty and wellness pros come to shine. Hey, IMAGE Pros, your business deserves booking, payment and client management tools as elevated and modern as your space. That's why GlossGenius's, top rated salon software is included in your lease at all inclusive locations, giving you everything you need to grow your business with less busy work. With one flat 2.6 payment processing, you can save 1000s on hidden fees while offering your clients a smooth checkout experience. Clients can book in just 30 seconds with no app downloads or login so you never miss an opportunity, plus AI powered marketing and automated wait list helps fill your schedule so you can focus on what you do best. Managing your business has never been easier with unlimited appointment reminders, forms and waivers built into booking payroll and time tracking, performance, insights and goal setting, tools and more on average, businesses see a 27% plus increase in revenue within the first year on gloss genius, no extra cost, no extra setup, just a powerful tool to help your business thrive, your image studios membership includes the best technology to support your success. So sign up today with coupon code IMAGEPROALLIN and select your location to start making the most of GlossGenius. In this special episode of The VIP Suite, we're replaying an Instagram live conversation I had with IMAGE Studios Founder and CEO, Jason Olsen, we dove into the recently passed bill that includes the no tax on tips provision, a huge win for independent professionals like you. Now this is a game changing update for our industry, and Jason breaks it all down, what it means, who it affects, and how it could impact your income as a beauty Pro, so whether you're a stylist, barber, aesthetician or wellness provider, this episode will give you the clarity you need to understand how this new provision could benefit your business. So let's jump into my conversation with Jason Olsen about this exciting development for independent beauty professionals. Hi, Jason.

Jason Olsen:

Hey Matthew, how are you?

Matthew Landis:

Doing good! Welcome to The Live

Jason Olsen:

Thanks for having me, yeah.

Matthew Landis:

So tell us a little bit more about this new provision, the no tax on tips provision, yeah.

Jason Olsen:

So good news for obviously, anyone in the beauty profession with the no tax on tips that was part of the One Big, Beautiful Bill, which was signed into law on July 4. Within that tax provision, or in that bill, is a provision that allows beauty professionals to deduct up to $25,000 annually in their reported tips from their federal federal tax income. And so this includes both cash and digital tips that you get from clients. So if you're using for any of our pros that are using GlossGenius or Venmo or other payment platforms that would you know, those would be allowable. Same with cash tips if you're getting cash tips that you're reporting and the provision applies for 2025 and goes until 2028 so we've got some good you've got at least several years where you're able to take advantage of this tax code that's currently in that One Big, Beautiful Bill. Yeah, so this is a short time window. We don't know what's going to happen in the future, but it's a good time to take advantage of that.

Matthew Landis:

So, you know, I follow a lot of online forums. I follow behind the chair and some of these other and I just see a lot of confusion around this and a lot of sort of misinformation. So we just want to set the record straight again. We're not We're not tax accountants, we're not professional financial advisors, but, but who would qualify for this deduction?

Jason Olsen:

So the individuals that qualify for this are anyone that rents a Salon Suite, and I'll speak to this in terms of image professionals. So if you're a beauty professional that's working in a booth, rent salon, a lot of these things are going to be the same for you as well. But also speak specifically for kind of our audience, but it's for any individual who's renting one of our salon suites that provides beauty or wellness services. So hair, if you're you know hair stylist or Barber, you're a nail artist, you're doing skin care or massage, you would qualify for this. You've gotta report your tips in order to qualify for this. So obviously you have to report that. And then there are other requirement is you. Must make less than 150,000 annually, if you're filing by yourself on your tax return. If you're married and filing jointly, your combined income cannot exceed 300,000 a year. So if you qualify under those provisions, then this deduction is available for you for 2025 which is great.

Matthew Landis:

I'm assuming that's taxable income, the 150,000 thing. Being in this business for 30 years,like I have, I always have lots and lots and lots of deductions. This is a very expensive business to be in, so this is a another great reason to be in this business, to be able to take some of that income and deduct that. That's wonderful. So what does this mean for a lot of our pros that are, you know, when they go to track their taxes and file their taxes?

Jason Olsen:

As a small business owner, you you know, we really encourage everyone to make sure you are tracking your expenses. So that when you are buying, you know, product and color, or your phone bill, or, you know, even your mileage to and from the salon, like, these are things you should be deducting on your taxes. Just again, it's part of you definitely don't want to be paying income tax on income if it doesn't, you know, if you've not included those expenses, because those expenses are something that you should deduct. So what you pay tax on is that net profit, you know, the difference between their service revenue, subtracting all your expenses and rent and other things like that to run the business. And then what's left over is what is the taxable income. So if you don't properly itemize your expenses and deductions, then you're going to be paying tax on higher than what real income truly was. And so definitely take advantage of this, and, you know, tracking your other expenses, and so Schedule C of your tax return is where your tips would be reported. This deduction that you can take part in is it will reduce the amount of income that you're taxed on that's going to show in Schedule C at the federal level. So by doing that, what that really means is that you can lower your income tax bill that you pay the IRS every year based on what your net profit was. And ideally, this ends up freeing up more cash to reinvest, whether it's in your business or to, you know, pull out of the business. And so ideally, it just by doing this, though it doesn't eliminate your responsibility to report your tips, so you need to be reporting those to be able to capture these and deduct what you can through this bill, and then you still are obligated to pay self employment tax, which does include your Social Security and Medicare. You know, this is where you know filing taxes personally is a little simpler than filing taxes for a business. And so we definitely want to make sure, you know, we always highly recommend that you use a tax professional to file a federal income tax and Schedule C for a business. And it's important to note too, there's a few states that that may not follow this rule on the state level. So even though this is a federal income tax deduction for the no tax on tips, which is great for, again, beauty professionals. You still have a state tax obligation, which is much smaller than the federal tax rate that you'd be paying for a business owner, but this is where, just again, we always recommend talking to a CPA to file your taxes. Is key for all this.

Matthew Landis:

I haven't filed my own taxes in probably 20 years. It's sometimes can be a little bit expensive. I think that I pay a fair amount, but I get so much out of hiring a professional. You know, I wouldn't hire, I can't cut my own hair. I'm a hairdresser by trade. I wouldn't try to do it myself. I'm certainly not going to try to do my own taxes. And what I have found in this business is it's easy to make, I've always found it's easy for me anyway to make money. It's harder to take money home. So what I love about this is that people are going to be able to take a little bit more money home for themselves and or reinvest in their business. So I think this is great, absolutely.

Jason Olsen:

Yeah. So again, really exciting news, though, while there is no permanent status on this, again, it ends in 2028, as of now. This is also how a lot of bills come out, right? So they're, they're, they typically sunset in three or four or five years. But that doesn't mean that if it's popular next election cycle, the next administration that gets into power could potentially extend this for another three to five years, and then it could end up being a permanent thing, if it's popular enough. And so again, it's while. It's not forever. It's at least till 2028 and it's definitely, you know, that means, gosh, that's going to be 100 grand, you know, over the next four years, 25-28 you can, you know, have no federal tax on up to $100,000 of tips if you are earning under 150,000 right now or again, 300,000 if you're filing jointly with your spouse.

Matthew Landis:

Yeah, Jason, we just had a question that asked, was there $1 amount limits? And could you repeat what that dollar amount, those dollar amount limits are?

Jason Olsen:

Yeah, good question. So in the bill, the provision. In for the no tax on tips is it allows beauty professionals or service professionals, but in this case, beauty professionals to deduct up to $25,000 in reported tips from their federal income tax. So what that means is, again, if you say you earned $100,000 in income and then collected$25,000 on top of that in tips, so your total income for the year would be 125,000 that$25,000 in reported tips is what is not taxable at the federal level. So you would not have to have a tax obligation for that$25,000 and I see another comment here, $150,000 annually is is the limit to qualify for this, right? So just to note, you don't have to make 150 don't have to make 150,000 a year. If you report and make more than 150,000 a year, then you are not eligible to take this tax deduction on your tips. But I think most people will probably qualify for that. If you are making more than 150,000 a year, then I would just say congratulations and great job. Yeah. So. But unfortunately, these things don't apply to everyone. If you're a really high earner, then it wouldn't apply to you. But again, I think it applies to most people, and it's a huge win. And then another question that just came in is, it is the the actual tip amount we collect, or just$25,000 as tips? I think if I understand that correctly, the$150,000 annually is, which is the limit for you to qualify for this. That means that your total combined income of what you earned plus your tips, cannot exceed $150,000 out of out of that let's again say 150,000 if 50,000 of that was tips, only 25,000 of that amount and tips you could not pay income tax on at the federal level. So hopefully that clarifies some of these questions coming in, which these are great questions, but it does. It does apply only to the tips collected that you report, and if those tips exceed 25,000 that doesn't mean you can't take this tax bill provision and not pay tax on those 25,000 what it means, though, is you, if you, you know, took in 50,000 in tips, the first $25,000 of tips would not be taxable at the federal level.

Matthew Landis:

I encourage people to track everything you know. I think that sometimes the fear of the tax man or the fear of being audited, people sometimes don't want to track things. But like I said before, I think this industry, it's really an expensive business to be in. And in my experience, I always had lots and lots of deductions that I could take by hiring that professional, by someone who knows what can be deducted. My tax bill was never exorbitant in at least, in my opinion, by doing things the right way and and tracking things the right way, and tracking everything can also benefit you down the line when it comes to buying a better home, getting better better rates on things. And so there's a lot of long term things about making sure that you're you're recording and making sure everything is reported correctly.

Jason Olsen:

So there's a question here from Deanna about she asked, do we know if this will be reflected on our schedule K that we get from our processing provider for taxes? I think what, what, what your question is, is the k1 is what is then submitted to you from your tax professional that then gets that's part of how then your taxes are calculated. So the k1 is sort of the final result of the tax return at the corporate level. Schedule C of the tax return is where you itemize deductions and things like this. With tips, again, I would highly recommend, if anyone's, you know, filing a corporate tax return on their own, and you you're comfortable with that, then that's up to you. It's just one of those things. I'm not, I would not dare. And so I again, if you're using a tax professional, they'll, they'll navigate all this. And the idea, though, is obviously, if you use a tax professional, hopefully you're saving more money in what you're properly reporting than what it costs for that tax prep.

Matthew Landis:

I've saved 1000s and 1000s and 1000s of dollars by having somebody, you know, paying a couple 100 bucks a year. 250, $500 a year. I don't know what. You know, everybody's a little bit different, but I've saved 1000s of dollars doing that professionally. What is the best way to keep these tips organized for taxes? Does GlossGenius have this ability? That is a great question. Actually, the GlossGenius app is an incredible way to track tips, cash, any way that you're receiving money. It's the app that we use here at IMAGE Studios That's, again, the IMAGE Studios App by GlossGenius. It has revenue and expense reporting. It you can track everything you it will help you. You can even create your own spreadsheet or use other apps like QuickBooks. But yes, GlossGenius does have the ability to track all kinds of income.

Jason Olsen:

If anyone's looking for a CPA that can help them with filing their their taxes at the federal level, you know, for for an independent professional that's renting a Salon Suite. You know, I've always found when you're looking for professionals like, like a tax professional, I would first ask around to your network, you know, other people that you know that might be a business, running a small business, and find out. You know, I think the best thing with a tax professional is to just make sure you've got some validation from someone else that they're happy with their work, right? And so I always say, talk to your network first. And if you're not able to find any answers through your network or through other people you know in the industry, you can get online on Google and search for, you know, good CPA for hairstylist. And there's some websites out there that are good where, you know, one is called collective.com it's accounting for solopreneurs so independent, you know, small business owners, like a beauty professional at image studios, you can reach out to, you know, a company like that, and see if they can get you in touch with someone, and then get set up to start taking advantage of this tax code. And then I see another question that just came in from Becky, does this apply if you're an S corp? I think Matthew, you're an S corp?

Matthew Landis:

Yes, I am an S-Corp. And again, I'm not a tax professional, so consult with your tax professional whether you should be an LLC or an S-Corp. But I am an S-Corp, which, which essentially means that I am registered as an employer and an employee, so I am both the employer and the employee. Now, where that helps me when it comes to taxes, and this includes taxes on all income, is that I get to write off the FICA. I get to write off the Social Security and the Medicare as the employer. So you don't get to do that if you're just an LLC, but if you're an S-Corp, because you get to play both roles, you get to deduct that FICA, that Medicare and Social Security as your own employer, basically like I am my boss. So that's just sort of like, you know, the next level up again, you know, talk with your tax person and see if that's the right step for you, because that's usually sort of a, you know, it's a step from one to the other.

Jason Olsen:

Yeah. So, and again, I saw someone dropped it in the comments. I appreciate people pinging out this info that they're getting for the other questions coming in. So, yeah, collective.com is a website you could look at another one to check out. Again, I don't have experience directly with these, but I would, I would say, you know, investigate and make a decision what makes sense for you. But another one is citrus accounting.com There's CPAs that have bookkeeping services specifically for salons and beauty professionals. So that's a good one to look at, too. And then I think there was another question that came in about someone had heard that this doesn't apply to suite owners. So if you are an independent beauty professional renting a suite, this does apply to you. It does not only apply to w-2 professionals. I think initially, when the bill was first proposed, it was talk that it was only going to apply to w-2 but the Professional Beauty Association, PBA, did a lot of lobbying on behalf of the beauty industry, on behalf of of you guys, to get this included, because so much of the beauty industry, so many people in the beauty industry are independent. They're, they're already, you know, independent business owners, whether they're booth rent or suite rental,

Matthew Landis:

Some working out of their house, exactly.

Jason Olsen:

Yeah. So good news is those, if you're not w-2 and you're independent, which, again, is most people that are probably watching right now, this does apply to you. Again, if you earn more than 150,000 a year, you are ineligible for it. But again, if your reported income is under that $150,000 limit annually, then you are I would definitely highly recommend you look into this and talk to your tax professional to figure out how you take advantage of that.

Matthew Landis:

Well, awesome, Jason. Thank you so much. Any last words, Jason, before we say good night.

Jason Olsen:

No again. Thanks for having me on, Matthew. I get love all the great questions that have come through and for people that have you know stopped what they're doing to watch this. But again, big win for the beauty industry. I think it's something everyone should be taking advantage of if they're eligible, because, again, if the tax code allows it, then you should be taking advantage of it for sure.

Matthew Landis:

Well, thank you, Jason, and have a good night, everybody.

Jason Olsen:

See ya.

Matthew Landis:

Thank you for tuning in to The VIP Suite. If you loved this episode, don't forget to subscribe and follow

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@imagestudios360 for more inspiration from our community of independent beauty and wellness pros interested in renting your own luxury studio or becoming a franchise owner, visit imagestudios360.com to learn more and take the next step toward building your dream business until next time, here's to beauty, health and wellness and building the life that you want you.