Tax
FICA Tip Credit: An Overlooked Restaurant Tax Credit
Restaurants can claim a federal credit for the employer portion of FICA paid on employee tips. Often missed; worth $5K–$50K+ per year for a typical restaurant.
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What the FICA Tip Credit Is
- Section 45B: federal income tax credit for the employer's share of FICA (7.65%) paid on employee tip income.
- Applies to food and beverage establishments where tipping is customary.
- Calculated on tip income that exceeds the federal minimum wage threshold (a defined formula).
- Credit is dollar-for-dollar against federal income tax, not a deduction.
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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.
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