Why is NFIB advocating for the 20 percent small business tax deduction?
Congress cut corporate taxes permanently in 2017, but made the 20 percent small business deduction temporary, expiring at the end of 2025. NFIB was integral in getting the deduction included in the Tax Cuts and Jobs Act, after initially being rebuffed by Congress.
The 20 percent small business deduction has been a huge success, allowing small businesses to reduce their tax burden meaningfully. Countless NFIB members have told us they’ve used those dollars to invest in their employees and business operations. The tax savings also have helped them deal with challenges like inflation and higher labor costs.
What impact will your members experience if the deduction expires?
Without immediate action by the next administration and Congress, nine out of 10 American small businesses will be hit with a massive tax hike. We have nearly 300,000 NFIB members across the country, many of whom are, frankly, on pins and needles.
Making the 20 percent small business deduction permanent will keep small businesses’ tax rates closer to their large corporate competitors’ rates. If there is no action, small businesses will be on a greatly uneven playing field. It would decimate their ability to grow, hire new workers,?provide for their employees and give back to their communities.
Ernst & Young’s recent analysis concluded that small businesses would flourish by making the deduction permanent, creating 1.2 million new jobs each year for the first 10 years and 2.4 million annually every year thereafter.
Is the deduction one of the single-most significant such federal small business-centric measures the small business community has seen since, say, 2000?
Indeed, it has been. Congress has been in gridlock for some time, but they’ve had their moments — good, bad and in the middle — for small business over the last two-plus decades.
This one was a good one in 2017, but it’s showtime again. “Talking” about supporting small businesses and actual support of small businesses are two very different things.
What are the main stumbling blocks to having the tax deduction extended?
Mostly political at the moment. We’re in an election year, so big-ticket items like this one often get put on the back burner.
We’re not waiting. This issue has been a priority for several years at our annual D.C. Fly-In event. We’ve collected 85,000 petitions (and counting) from our members, which we presented recently in testimony at a Senate hearing. We’re doing opinion editorials, talk radio, roundtables in the districts with congressional leaders and our members, and more.
Grassroots action is critical. Our members are directly bending the ears of their senators and representatives — in person, on calls and via emails.
Your members need time to plan for calendar year 2025. So this delay on extending the deduction seemingly could be putting them in a bind of sorts. Thoughts?
Uncertainty is an enemy of small business owners.
And it wouldn’t just put them in a bind. It would harm their employees and our overall economy.
