Internal Revenue Code · 26 U.S.C.

§ 45B. Credit for portion of employer social security taxes paid with respect to employee cash tips

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 45B

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: August 10, 1993 by Pub. L. 103–66
Last amended: July 4, 2025 by Pub. L. 119–21
Amendments: 3 dated changes in the source credit
Length: 4 subsections · 406 words · about 2 min to read
Defines: 1 term
Cross-references: cites 4; cited by 3 Code sections and 1 other regulation

¶(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 “” 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) (without regard to whether such tips are reported under section 6053), 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, and in the case of food or beverage establishments, as in effect on January 1, 2007).

¶(2) 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:

¶(A) 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.

¶(B) The providing of any of the following services to a customer or client if the tipping of employees providing such services is customary:

¶(i) Barbering and hair care.

¶(ii) Nail care.

¶(iii) Esthetics.

¶(iv) Body and spa treatments.

¶(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.

(Added Pub. L. 103–66, title XIII, § 13443(a), Aug. 10, 1993, 107 Stat. 568; amended Pub. L. 104–188, title I, § 1112(a)(1), (b)(1), Aug. 20, 1996, 110 Stat. 1759; Pub. L. 110–28, title VIII, § 8213(a), May 25, 2007, 121 Stat. 193; Pub. L. 119–21, title VII, § 70201(e), July 4, 2025, 139 Stat. 171.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

excess employer social security tax § 45B(b)(1)

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 4 other sections

Cited by 3 Code sections

Cited in 1 regulation not issued under it

§ 31.3511-1 Certified professional employer organization.

Amendment history

From the source credit and the official notes, newest first.

July 4, 2025Amended by Pub. L. 119–21Parts changed in 2025: (b)(1)(B) (b)(2)
May 25, 2007Amended by Pub. L. 110–28Parts changed in 2007: (b)(1)(B)
August 20, 1996Amended by Pub. L. 104–188Parts changed in 1996: (b)(1)(A) (b)(2)
August 10, 1993Added by Pub. L. 103–66

Where it sits in the Code

Nearby sections

§ 44G Renumbered
§ 44H Renumbered
§ 45 Electricity produced from certain renewable resources, etc.
§ 45A Indian employment credit
§ 45B Credit for portion of employer social security taxes paid with respect to employee cash tips
§ 45C Clinical testing expenses for certain drugs for rare diseases or conditions
§ 45D New markets tax credit
§ 45E Small employer pension plan startup costs
§ 45F Employer-provided child care credit

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

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.

Amendments

2025—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”.

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 January 1, 2007, 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.”

Effective Date of 2025 Amendment

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.”

Effective Date of 2007 Amendment

Pub. L. 110–28, title VIII, § 8213(b), May 25, 2007, 121 Stat. 193, provided that: “The amendment made by this section [amending this section] shall apply to tips received for services performed after December 31, 2006.”

Effective Date of 1996 Amendment

Pub. L. 104–188, title I, § 1112(a)(3), Aug. 20, 1996, 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), Aug. 20, 1996, 110 Stat. 1759, provided that: “The amendment made by paragraph (1) [amending this section] shall apply to tips received for services performed after December 31, 1996.”

Effective Date

Section applicable with respect to taxes paid after Dec. 31, 1993, 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.