In Toca Life: City, there is the hair salon building, where you can do many things, including cut, style, and color your hair.
In the Toca Life: City hair salon, there are 3 stations to get your hair done, one with shorter hair, one with longer hair, and another with unusual hair styles. You can set your character in one of these three stations, choose which hairstyle you like, and tap it, so your character will have a new look.
To the right of the stations, there is a shelf with many different jars of hair dye, which you hold over your character's hair. Ranging from jet black to cyan, you can make your character look just the way you like!