Title 26 — Internal Revenue Code
Part IV · Chapter 1 — Normal Taxes and Surtaxes
§ 45B. Credit for portion of employer social security taxes paid with respect to employee cash tips
Statutory text
General rule
For purposes of section 38, the employer social security credit determined under this section for the taxable year is an amount equal to the excess employer social security tax paid or incurred by the taxpayer during the taxable year.
Excess employer social security tax
For purposes of this section—
In general
The term “excess employer social security tax” means any tax paid by an employer under section 3111 with respect to tips received by an employee during any month, to the extent such tips—
are deemed to have been paid by the employer to the employee pursuant to section 3121(q) (without regard to whether such tips are reported under section 6053), and
exceed the amount by which the wages (excluding tips) paid by the employer to the employee during such month are less than the total amount which would be payable (with respect to such employment) at the minimum wage rate applicable to such individual under section 6(a)(1) of the Fair Labor Standards Act of 1938 (determined without regard to section 3(m) of such Act, and in the case of food or beverage establishments, as in effect on ).
Application only to certain lines of business
In applying paragraph (1) there shall be taken into account only tips received from customers or clients in connection with the following services:
The providing, delivering, or serving of food or beverages for consumption, if the tipping of employees delivering or serving food or beverages by customers is customary.
The providing of any of the following services to a customer or client if the tipping of employees providing such services is customary:
Barbering and hair care.
Nail care.
Esthetics.
Body and spa treatments.
Denial of double benefit
No deduction shall be allowed under this chapter for any amount taken into account in determining the credit under this section.
Election not to claim credit
This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Revenue Reconciliation Act of 1993
Pub. L. 103–66 title XIII § 13443(a) · 107 Stat. 312
Enacted · 26 U.S.C. § 45B
Added Pub. L. 103–66, title XIII, § 13443(a), Aug. 10, 1993, 107 Stat. 568
Source evidence
Code source credit
Added Pub. L. 103–66, title XIII, § 13443(a), Aug. 10, 1993, 107 Stat. 568Enacted provision · exact public law section
(a) In General.— Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end the following new section: “SEC. 45B. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS. “(a) General Rule.— For purposes of section 38, the employer social security credit determined under this section for the taxable year is an amount equal to the excess employer social security tax paid or incurred by the taxpayer during the taxable year. “(b) Excess Employer Social Security Tax.— For purposes of this section— “(1) In general.— The term ‘excess employer social security tax’ means any tax paid by an employer under section 3111 with respect to tips received by an employee during any month, to the extent such tips— “(A) are deemed to have been paid by the employer to the employee pursuant to section 3121(q), and “(B) exceed the amount by which the wages (excluding tips) paid by the employer to the employee during such month are less than the total amount which would be payable (with respect to such employment) at the minimum wage rate applicable to such individual under section 6(a)(1) of the Fair Labor Standards Act of 1938 (determined without regard to section 3(m) of such Act). “(2) Only tips received at food and beverage establishments taken into account.— In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the provision of rood or beverages for consumption on the premises of an establishment with respect to which the tipping of employees serving food or beverages by customers is customary. “(c) Denial of Double Benefit.— No deduction shall be allowed under this chapter for any amount taken into account in determining the credit under this section. “(d) Election Not To Claim Credit.— This section shall not apply to a taxpayer for any taxable year if such taxpayer elects to have this section not apply for such taxable year.”Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1112(a)(1) · 110 Stat. 1755
Inserted · 26 U.S.C. § 45B(b)(1)(A)
Pub. L. 104–188, § 1112(a)(1), inserted “(without regard to whether such tips are reported under section 6053)” after “section 3121(q)”
Source evidence
Code amendment note
Subsec. (b)(1)(A). Pub. L. 104–188, § 1112(a)(1), inserted “(without regard to whether such tips are reported under section 6053)” after “section 3121(q)”.Enacted provision · exact public law section
(1) Reporting requirement not considered.— Subparagraph (A) of section 45B(b)(1) (relating to excess employer social security tax) is amended by inserting “(without regard to whether such tips are reported under section 6053)” after “section 3121(q)”.Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1112(b)(1) · 110 Stat. 1755
Amended · 26 U.S.C. § 45B(b)(2)
Pub. L. 104–188, § 1112(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Only tips received at food and beverage establishments taken into account.—In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the provision of food or beverages for consumption on the premises of an establishment with respect to which the tipping of employees serving food or beverages by customers is customary.”
Source evidence
Code amendment note
Subsec. (b)(2). Pub. L. 104–188, § 1112(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Only tips received at food and beverage establishments taken into account.—In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the provision of food or beverages for consumption on the premises of an establishment with respect to which the tipping of employees serving food or beverages by customers is customary.”Enacted provision · exact public law section
(1) In general.— Paragraph (2) of section 45B(b) is amended to read as follows: “(2) Only tips received for food or beverages taken into account.— In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary.”.Small Business and Work Opportunity Tax Act of 2007
Pub. L. 110–28 title VIII § 8213(a) · 121 Stat. 112
Inserted · 26 U.S.C. § 45B(b)(1)(B)
Pub. L. 110–28 inserted “as in effect on January 1, 2007, and” before “determined without regard to”
Source evidence
Code amendment note
Subsec. (b)(1)(B). Pub. L. 110–28 inserted “as in effect on January 1, 2007, and” before “determined without regard to”.Enacted provision · exact public law section
(a) In General.— Subparagraph (B) of section 45B(b)(1) 26 USC 45B. is amended by inserting “as in effect on January 1, 2007, and” before “determined without regard to”.Pub. L. 119–21 § 70201(e)(2) · 139 Stat. 171
Struck and inserted · 26 U.S.C. § 45B(b)(1)(B)
Pub. L. 119–21, § 70201(e)(2), struck out “as in effect on January 1, 2007, and” before “determined without regard to” and inserted “, and in the case of food or beverage establishments, as in effect on January 1, 2007” after “without regard to section 3(m) of such Act”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(1)(B). Pub. L. 119–21, § 70201(e)(2), struck out “as in effect on January 1, 2007, and” before “determined without regard to” and inserted “, and in the case of food or beverage establishments, as in effect on January 1, 2007” after “without regard to section 3(m) of such Act”.Effective date note
Pub. L. 119–21, title VII, § 70201(j), July 4, 2025, 139 Stat. 173, provided that: “The amendments made by this section [enacting section 224 of this title, amending this section and sections 63, 199A, 6041, 6041A, 6050W, 6051, and 6213 of this title, and renumbering former section 224 of this title as section 225] shall apply to taxable years beginning after December 31, 2024.”Pub. L. 119–21 § 70201(e)(1) · 139 Stat. 171
Amended · 26 U.S.C. § 45B(b)(2)
Pub. L. 119–21, § 70201(e)(1), amended par. (2) generally. Prior to amendment, text read as follows: “In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary.”
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(2). Pub. L. 119–21, § 70201(e)(1), amended par. (2) generally. Prior to amendment, text read as follows: “In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary.”Effective date note
Pub. L. 119–21, title VII, § 70201(j), July 4, 2025, 139 Stat. 173, provided that: “The amendments made by this section [enacting section 224 of this title, amending this section and sections 63, 199A, 6041, 6041A, 6050W, 6051, and 6213 of this title, and renumbering former section 224 of this title as section 225] shall apply to taxable years beginning after December 31, 2024.”
4 of 6 references resolved to an enrolled provision · 2 unresolved
Editorial Notes
References in Text
Sections 3(m) and 6(a)(1) of the Fair Labor Standards Act of 1938, referred to in subsec. (b)(1)(B), are classified to sections 203(m) and 206(a)(1), respectively, of Title 29, Labor.
Amendments1996–2025 · 3 rounds
2025
Subsec. (b)(1)(B). Pub. L. 119–21, § 70201(e)(2), struck out “as in effect on , and” before “determined without regard to” and inserted “, and in the case of food or beverage establishments, as in effect on ” after “without regard to section 3(m) of such Act”.
Subsec. (b)(2). Pub. L. 119–21, § 70201(e)(1), amended par. (2) generally. Prior to amendment, text read as follows: “In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or beverages by customers is customary.”
2007
Subsec. (b)(1)(B). Pub. L. 110–28 inserted “as in effect on , and” before “determined without regard to”.
1996
Subsec. (b)(1)(A). Pub. L. 104–188, § 1112(a)(1), inserted “(without regard to whether such tips are reported under section 6053)” after “section 3121(q)”.
Subsec. (b)(2). Pub. L. 104–188, § 1112(b)(1), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Only tips received at food and beverage establishments taken into account.—In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the provision of food or beverages for consumption on the premises of an establishment with respect to which the tipping of employees serving food or beverages by customers is customary.”
Statutory Notes and Related Subsidiaries
Effective Date of 2025 Amendment
Pub. L. 119–21, title VII, § 70201(j), , 139 Stat. 173, provided that: “The amendments made by this section [enacting section 224 of this title, amending this section and sections 63, 199A, 6041, 6041A, 6050W, 6051, and 6213 of this title, and renumbering former section 224 of this title as section 225] shall apply to taxable years beginning after .”
Effective Date of 2007 Amendment
Pub. L. 110–28, title VIII, § 8213(b), , 121 Stat. 193, provided that: “The amendment made by this section [amending this section] shall apply to tips received for services performed after .”
Effective Date of 1996 Amendment
Pub. L. 104–188, title I, § 1112(a)(3), , 110 Stat. 1759, provided that: “The amendments made by this subsection [amending this section and provisions set out as a note under section 38 of this title] shall take effect as if included in the amendments made by, and the provisions of, section 13443 of the Revenue Reconciliation Act of 1993 [Pub. L. 103–66].”
Pub. L. 104–188, title I, § 1112(b)(2), , 110 Stat. 1759, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to tips received for services performed after .”
Effective Date
Section applicable with respect to taxes paid after , with respect to services performed before, on, or after such date, see section 13443(d) of Pub. L. 103–66, as amended, set out as an Effective Date of 1993 Amendment note under section 38 of this title.
Credits
1993–2025 · 4 acts
- 1993Added Pub. L. 103–66, title XIII, § 13443(a), , 107 Stat. 568
- 1996amended Pub. L. 104–188, title I, § 1112(a)(1), (b)(1), , 110 Stat. 1759
- 2007Pub. L. 110–28, title VIII, § 8213(a), , 121 Stat. 193
- 2025Pub. L. 119–21, title VII, § 70201(e), , 139 Stat. 171.
Show as published
(Added Pub. L. 103–66, title XIII, § 13443(a), , 107 Stat. 568; amended Pub. L. 104–188, title I, § 1112(a)(1), (b)(1), , 110 Stat. 1759; Pub. L. 110–28, title VIII, § 8213(a), , 121 Stat. 193; Pub. L. 119–21, title VII, § 70201(e), , 139 Stat. 171.)