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November 3, 2022
Small business owners explain how the expiration of the Small Business Deduction after 2025 would hurt their businesses
NFIB Members Discuss the Importance of the Small Business Deduction
“If the small business deduction does not become permanent, it is going to have an impact on what we can do with our company,” said Eddie Wetherill, a small business owner from North Carolina.
Since it took effect in 2018, the Small Business Deduction (Section 199A) has allowed small businesses organized as pass-through entities like Sole proprietorships, S-Corporations, Partnerships, or LLCs, to deduct up to 20% of their qualified business income. Small businesses across the nation have benefited from this tax break. Despite its positive impact, the Small Business Deduction is set to expire after 2025, which will complicate long term planning for small business owners.
The Main Street Tax Certainty Act, introduced in both the House and Senate, would make the Small Business Deduction and its benefits permanent.
“If that 20% were to become permanent, and we knew that we would get that all the time, then we would know how much money we would have to set aside and be able to reinvest…If that money’s not there to reinvest, then the company won’t do as well,” said Kellie Loudin, a small business owner from Ohio.
The Small Business Deduction allows many small businesses to reinvest in their employees and business operations. According to NFIB’s latest research, 56% of small business owners reported capital outlays in the last six months, 45% reported raising compensation, and 23% plan to create new jobs in the next three months. For many small businesses, such investments are possible because of the Small Business Deduction.
You can click here for a simple flowchart to determine if you’re benefiting from the Small Business Deduction. As Congress continues to consider changes to tax policy, it is important to show that the Small Business Deduction has robust support from NFIB members.?We need your help to thank co-sponsors of legislation to make the Small Business Deduction permanent, and to encourage others to champion small business tax relief.
“At the end of the day, it’s not so much the impact on the ownership as it is on all those folks who are a part of the business’ environment. Our staff are going to feel it the most,” said Loren King, a small business owner from Indiana.
Take action: Write a message to your legislators so they understand how the Small Business Deduction has helped you continue to run your business.
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NFIB is a member-driven organization advocating on behalf of small and independent businesses nationwide.
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