A side-by-side comparison: The small business tax increases in Washington’s infrastructure spending proposals
Taxes remain a top concern for small businesses and 90% of owners report that federal business income tax was a financial burden for their business. Despite these concerns, inflation, workforce challenges, and the fragile economic recovery that small businesses are managing, Congress is considering “physical infrastructure” and “human infrastructure” proposals that would pile on tax increases and new mandates. In the table below, you’ll find a summary of the various infrastructure plans and tax increases that could break the fragile small business recovery.
NFIB is fighting to protect small businesses from Washington, D.C.’s proposed tax hikes and new mandates and this month there are three ways you can make the voice of small business even louder:
- In August, many U.S. Senators and Representatives host in-person or virtual townhall-style events in their communities. Check your representatives’ websites and social media pages to find a meeting you can attend. Click here for tips on effectively communicating with your lawmakers.
- See what other small business owners are saying in NFIB’s In Their Own Words video series and email us to tell your story too.
- Email your members of Congress concerning the tax increases and mandates that threaten to break the fragile recovery. Our simple take action system makes it easy to customize your message:
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As a small business owner, what do I need to know about my taxes and the infrastructure plans in Washington, D.C.? Last updated Wednesday, August 18, 2021 |
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Bipartisan “Physical Infrastructure” Deal |
“Human Infrastructure” Budget Reconciliation Spending Bill |
U.S. Sen. Ron Wyden’s Small Business Deduction Limit Bill |
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Tax Changes for Small Business |
A reduction in the duration of the Employee Retention Tax Credit – curtailing the availability of this federal pandemic-recovery financial assistance tax credit in Q4 of this year. Click for more info about this credit. This bill was adapted from President Biden’s American Jobs Plan, but corporate tax increases to offset the investments in roads, bridges, transit, broadband, and water systems were dropped. |
Final bill remains to be seen. Reportedly it includes a growing list of substantial tax increases on small businesses such as a family business tax increase, small business corporate tax increase, individual tax rate increase, and limiting the Small Business Deduction. Click for more info. It is expected that the bill will be adapted largely from President Biden’s American Families Plan and additional tax increases may be incorporated. |
Limiting the Small Business Deduction. This would impact line 13 on your 2020 IRS Form 1040 by quickly phasing it out for businesses with more than $400,000 in business income. Limiting the Small Business Deduction is overwhelmingly opposed by 90% of small business owners and would harm small business hiring and investment. Click for more info. |
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Status |
This bipartisan “physical infrastructure” bill was passed by the U.S. Senate on Aug. 10 and the House may consider it as soon as the week of Aug. 23. |
The House and the Senate will draft this “human infrastructure” bill in the coming weeks. It will only require 50 votes plus the Vice President’s vote to pass the Senate. A $3.5 trillion framework that paves the way for this bill passed the Senate on Aug. 10. |
While not an infrastructure proposal, this so-called Small Business Tax Fairness Act may be rolled into the “human infrastructure” negotiations. |
