Recent episodes cover the 20% Small Business Deduction and provide insights from a newly released NFIB banking survey
Two newly released Small Business Rundown episodes featured U.S. Congressman Henry Cuellar (D-TX) and NFIB President Brad Close discussing the importance of the 20% Small Business Deduction, and the other episode highlighted survey results on small business banking activities with NFIB Research Center Executive Director Holly Wade.
Campaign to Stop the Small Business Tax Hike
Congressman Cuellar is one of the leaders in the U.S. House who introduced the Main Street Tax Certainty Act last month. This bill would make the 20% Small Business Deduction permanent.
“This is a bipartisan effort,” Rep. Cuellar explained. “It’s important to understand that small businesses need this type of assistance. When the tax bill was passed back in 2017, it did provide a 21% corporate rate that was permanent, but the 2017 tax schedule made the 20% small business deduction time period expire in 2025. This is why NFIB is pushing so hard, and we have to push hard to make sure we get there before 2025. We cannot have a lapse for small businesses. We have to make sure that small businesses have the tools so they can succeed.”
The 20% Small Business Deduction was created in the 2017 tax law to bring small businesses’ tax rates closer to that of their large, corporate competitors. It allows small businesses to deduct up to 20% of their qualified business income, which owners use to invest in their employees and plan for future business operations.
“Two years from now is not that long for small businesses,” explained Close. “As they plan on what to do with the income right now that they’re making each year and also what their tax returns are, they know that’s going to change in two years. For many of them, that’s going to be a significant increase in their taxes and a massive tax increase at the end of 2025 that they’re not really expecting right now and will force them to adjust their plans for their business.”
NFIB recently launched an issue and educational campaign to urge Congress to take action on this issue. “Education is the key,” said Close. “So many small business owners benefit from this but aren’t aware of it. For them, the biggest thing is looking at their 1040 tax return. Find line 13, that number on there is the money that you have been able to keep in your pockets in the business because of this tax deduction.”
“We need to make sure that all members understand that this is something that will help their mom-and-pop small businesses,” said Rep. Cuellar. “If they’re able to deduct up to 20% of their qualified business income then those small business owners can turn around and invest it in their employees, invest it in their business operations, so they can keep moving and grow. We want to make sure that small businesses can grow, they can invest, and they can hire and keep the unemployment rate as small as possible.”
Listen to the podcast to hear everything Rep. Cuellar and Close had to say on the issue and click below to learn more.
Survey Highlights Banking Concerns for Small Business
The NFIB Research Center recently released results from a survey asking small business owners about their banking activities and their experience accessing credit.
“This is part two; the first part of our banking survey was a publication that we released back in April, and this was all as a result of the banking problems that we had with Silicone Valley Bank and Signature Bank in March,” said Wade. “We wanted to see what the impact was of these bank failures on the small business sector or if there was any impact.”
Bank consolidation has been aggressive in the past. The survey asked about the size of banks that small businesses use, the impact of location, and how often they visit their bank.
Small business owners had a few top credit concerns that were found in the survey results:
- Rising costs of financing
- Amount of financing received
- Additional collateral requirements
- Paperwork and process to apply for financing
“The main reason [small business owners are seeking financing] is just operational,” explained Wade. “Inventory and the cost of operating their business is why they’re looking for financing to keep that going and streamlining cash flow issues they might have. For a number of them, it’s expanding their business…For others, it’s replacing those capital expenditures that are broken down or there’s new equipment that might be a better fit for their business.”
Listen to the full podcast to find out what was learned about the impact the banking crisis had on the small business economy and how small business owners feel about the economy overall.
