Why No Tax on Tips Could Be Bad for Studio Owners

When good news for employees means surprise costs for you.

The No Tax on TIPS Act (HR482) sounds like a win, workers keep 100% of their tips, tax-free. Great for morale, right? But for studio owners? Not so fast.

At PYOP Accounting, we help creative entrepreneurs like you avoid turning feel-good policies into surprise expenses, and this one could be sneaky.

Here’s the deal: while your team may no longer owe income tax on tips, you still owe payroll taxes on every dollar they report. And guess what? With no tax burden, employees might start reporting way more (including those cash tips they used to “forget”).

More honesty = higher wages for them… and higher taxes for you.

🧾 What This Means for Studios:

• Expect tip culture to grow in your studio (especially at events and parties).
• Your payroll taxes could spike as tip reporting becomes more transparent.
• You can't suddenly rebrand yourself into a tip-based business, only traditionally tipped jobs count (for now).

✅ What to Do Next:

• Update your payroll system to track tips separately, platforms like Gusto or OnPay are great for this.
• Monitor tip trends in your studio to spot changes early.
• Stay tuned, the final rulebook isn’t published yet, and we’ll break it down when it is.

At PYOP Accounting, we help studio owners build businesses that are creative and financially sound. So before you throw up a “tips appreciated” sign at the register, let’s make sure you’re ready to handle what comes with it.

✨ Book a call with us today. Because more tips shouldn’t mean more stress.

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Donna Bordeaux, CPA with PYOPAccounting.com

Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA, as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.