Small Businesses Applaud Ruling Upholding State Tax Relief

Date: November 17, 2021

WASHINGTON, D.C. (Nov. 17, 2021) – The NFIB Small Business Legal Center applauds the Northern District of Alabama’s decision upholding the state’s rights to use federal stimulus funds from the American Rescue Plan for state tax relief. NFIB filed an amicus brief in the case supporting Alabama in its challenge to the provision of the American Rescue Plan Act of 2021 that would prevent states from using federal funds for state tax relief.

“This is a welcome decision for small businesses who would greatly benefit from tax relief after the pandemic,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center. “The American Rescue Plan was passed with the intention to relieve some of the financial burdens caused by the COVID-19 pandemic. Now, states can use those funds to further help small businesses recover.”

The Northern District of Alabama permanently enjoined the enforcement for the following states: Alabama, Arkansas, Alaska, Florida, Iowa, Kansas, Montana, New Hampshire, Oklahoma, South Carolina, South Dakota, Utah, and West Virginia.

The American Rescue Plan Act of 2021 made funds available to states if and only if states agree to not pass any laws or take any administrative actions that directly or indirectly decrease their net revenue, whether that decrease comes through tax credits, rebates, reductions in tax credits, or new or expanded deductions. NFIB argued the court should block this unprecedented tax mandate and grant the states’ motion for an injunction.

The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.

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