IFA Asks Treasury Department to Ensure Pet Grooming Franchises Are Eligible for “No Tax on Tips” Credit

By:  International Franchise Association

As part of the International Franchise Association’s ongoing advocacy on behalf of franchised businesses, IFA has joined with industry stakeholders in a formal request to the U.S. Department of the Treasury to ensure that pet grooming businesses are explicitly included in the implementation of the expanded Section 45B FICA tip credit.  View the letter here.

The request comes in response to the recently passed “One, Big, Beautiful Bill” (P.L. 119-21), which includes a key provision—known as “No Tax on Tips”—extending the existing Section 45B employer FICA tax credit for cash tips to employees in “beauty services” businesses where tipping is customary. This now includes industries such as salons, spas, and barbershops. IFA is urging Treasury officials to clarify that pet grooming—where similar services are performed and tipping is also a standard practice—should be included under the same definition.

IFA signed a joint letter with other trade associations, companies and sixteen franchised brands to Treasury Secretary Bessent, explaining the economic and practical importance of including pet grooming in this expansion. Pet groomers provide aesthetic services such as hair cutting, shampooing, and nail trimming—analogous to those provided in human beauty salons—and routinely receive tips for their work. Beyond aesthetics, these services also contribute to a pet’s health and well-being.

“Pet grooming is one of the fastest-growing segments in franchising and represents a $3.5 billion market in 2025, making up over a quarter of the broader pet services industry,” the letter notes. “Recognizing pet grooming within the ‘beauty services’ category will level the playing field for franchise businesses in this space, enabling them to benefit from the same tax advantages as other tipped industries.”

Extending this credit to pet grooming franchises will allow these businesses to reinvest in their growth—opening new locations, hiring staff, and delivering exceptional service to pet parents nationwide.

IFA remains committed to advocating for policies that support franchisors and franchisees across all sectors. This clarification from Treasury would go a long way in ensuring fairness and fostering continued economic opportunity across the pet care industry.

 

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