The National Federation of Independent Business (NFIB), Michigan’s leading small business advocacy organization, released a new report outlining the benefits the 20% Small Business Tax Deduction will bring to Michigan if it is made permanent. The report also highlights that the 945,000 small businesses in Michigan could face significantly higher taxes if Congress does not make the 20% Small Business Deduction permanent. The report outlines the severe consequences for small businesses in Michigan and the broader U.S. economy that would result from the provision’s expiration, highlighting potential economic slowdown and increased financial strain on local businesses.

The report highlights a stark contrast in tax rates between small businesses and their larger corporate competitors if the deduction is not made permanent. In Michigan, the C-Corp tax rate would remain at 27%, while the small business rate would surge to 43.85%.

However, making the deduction permanent would lead to significant economic benefits, leaving the small business tax rate on a level playing field with its competitors. Additionally, Michigan is projected to gain 37,000 new jobs annually over the next 10 years if the deduction remains in place, including an annual GDP increase of $1.92 billion for the first decade and $3.96 billion per year beyond 2035.

View the report for Michigan here.

“The 20% Small Business Deduction is a great benefit to Michigan’s small businesses, and owners are concerned about a potential tax increase if it’s not made permanent,” said NFIB Michigan State Director Amanda Fisher. “If Congress allows the 20% Small Business Deduction to expire, a massive tax hike on Michigan’s small businesses will take effect and stifle growth. This Tax Day, Congress should provide certainty to small businesses and act quickly to make this federal deduction permanent.”

The 20% Small Business Tax Deduction, a key provision of the Tax Cuts and Jobs Act of 2017, has empowered millions of small business owners to expand, hire employees, and increase wages. If Congress does not act to make it permanent this year, nine out of 10 small businesses will face a significantly higher tax burden, threatening jobs and economic stability nationwide.

For more information about NFIB’s advocacy efforts and to access Michigan’s report, visit: www.nfib.com/stopsmallbiztaxhike.