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Congress has delivered a long-awaited victory for restaurants and service-based businesses by ensuring employers receive a dollar-for-dollar tax credit on the FICA taxes paid on employee tips. For decades, restaurants have shouldered higher payroll tax burdens due to tipped income—despite tips being paid by customers, not employers. The strengthened 45B FICA Tip Tax Credit finally brings meaningful relief and reaffirmation of the vital role restaurants play in local economies.

This reform supports an industry built on small-business entrepreneurs, family-owned establishments, and diverse operators who serve as job creators and community anchors. The updated credit will help offset rising labor costs, free up capital for staff retention, training, and growth, and promote accurate tip reporting across the industry.

More than just tax fairness, this update is a signal: restaurants matter. The hospitality sector employs millions, drives cultural and economic vibrancy, and serves as an entry point to opportunity for workers nationwide. Strengthening the FICA Tip Tax Credit is not only a policy win—it’s long-overdue recognition of the restaurant community’s essential contributions to America’s workforce and economy.