How to File Self-Employed Hair Stylist Taxes

If you are a hair stylist who rents a booth, owns a salon, or travels to clients, you are considered self-employed for tax purposes. Unlike a salon employee who receives a Form W-2, this classification shifts the responsibility for managing and paying taxes entirely onto you. Understanding these obligations is important for your business’s financial health and compliance with federal and state requirements.

Identifying Your Taxable Income

As a self-employed hair stylist, all money earned from your business is considered taxable income. This includes revenue from all services, such as haircuts and coloring, as well as all tips you receive. The Internal Revenue Service (IRS) views tips as payments for services, so they must be reported as income regardless of how they are paid, whether as cash, on a credit card, or through a digital app. Diligent tracking of all income sources is important for accurate reporting.

Income from selling retail products like shampoo or styling gels must also be accounted for. To determine the taxable amount from these sales, you first subtract the Cost of Goods Sold (COGS) from your total product sales revenue. This resulting gross profit from retail is then added to your service and tip income to determine your total business income.

Common Tax Deductions for Hair Stylists

You can lower your taxable profit by subtracting business costs from your gross income. Deductible expenses must be “ordinary,” meaning common in your industry, and “necessary,” meaning helpful for your business. A primary deduction for many independent stylists is the fee paid for booth or chair rental.

Supplies you use daily are fully deductible, including products consumed during client services like shampoos, hair color, and styling mousses. Tools and equipment are also deductible business expenses. Smaller items like shears, combs, and capes can be expensed in the year they are purchased. Larger equipment such as styling chairs or high-end hair dryers may need to be depreciated, meaning you deduct their cost over several years. The IRS de minimis safe harbor election allows you to deduct items costing up to $2,500 in the year they are bought.

Other common deductions include:

• Fees for renewing your cosmetology license, costs for advanced training courses, and subscriptions to trade publications.
• Premiums for professional liability insurance.
• Marketing costs, such as for business cards, website hosting, and online advertising.
• Vehicle expenses for business-related travel, such as driving to a supply store or a client’s home. For 2025, you can use the standard mileage rate of 70 cents per mile or track actual costs like gas, oil changes, and insurance. A detailed mileage log is required for either method.
• Bank fees for a business account and credit card processing fees.
• The business-use percentage of your personal cell phone bill.
• The cost and cleaning of uniforms if they are required for work and not suitable for everyday wear.

Calculating and Paying Your Taxes

Your tax calculation begins with a simple formula: gross income minus business deductions equals net earnings. This net profit is subject to two primary taxes. The first is the self-employment tax, the equivalent of Social Security and Medicare taxes (often called FICA) paid by employees and employers. It consists of 12.4% for Social Security up to an annual income limit and 2.9% for Medicare with no limit. You can deduct one-half of your self-employment tax when calculating your adjusted gross income (AGI).

The second is federal income tax, which is calculated on your net earnings after the self-employment tax deduction. Your business profit is added to any other income to determine your final tax liability based on your tax bracket.

Since taxes are not withheld from your income, you must pay them throughout the year via quarterly estimated tax payments. These payments are required if you expect to owe at least $1,000 in tax for the year and must cover both self-employment and income taxes. For the 2025 tax year, the deadlines are April 15, June 16, September 15, and January 15, 2026. If a due date falls on a weekend or holiday, the deadline moves to the next business day.

Essential Recordkeeping and Tax Forms

Maintaining good records is the backbone of managing your tax obligations. The most effective practice is to open a separate bank account for your business to avoid mixing personal and business finances. Using this account for all income deposits and expense payments creates a clear financial trail. You should save all receipts, invoices, and bank statements as proof of your income and expenses. If you deduct vehicle expenses, you must also keep a detailed mileage log for each business trip.

Several IRS forms are central to filing your taxes. Schedule C, Profit or Loss from Business, is the primary form where you will report your total gross income and categorize all of your deductible business expenses to find your net profit. Schedule SE, Self-Employment Tax, is used to calculate the Social Security and Medicare taxes you owe based on the net profit from Schedule C. Form 1040-ES, Estimated Tax for Individuals, is the worksheet used to calculate your required quarterly estimated tax payments. This form includes payment vouchers for mailing payments, though online payment options are also available.

The Annual Tax Filing Process

When filing your annual tax return, you will use your year-long records to complete the necessary forms. The net profit calculated on your Schedule C is transferred to your main Form 1040 as business income. The total self-employment tax from Schedule SE is also carried over to your Form 1040 and added to your income tax liability.

You can submit your completed tax return to the IRS in several ways. Many people use tax preparation software to fill out and e-file their returns. Another option is to hire a qualified tax professional, such as a Certified Public Accountant (CPA) or an Enrolled Agent, to prepare and file the return on your behalf. You can also fill out paper forms and mail them to the IRS.

After filing, you will settle your tax account for the year. If your quarterly payments were less than your total tax liability, you must make a final payment by the tax deadline, which is typically April 15. If your payments exceeded what you owed, you will receive a refund.