WASHINGTON, D.C. (Nov. 20, 2024) – The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, sponsored an event with The Hill along with other small business leaders, tax experts, and policymakers, to delve into the impact of the Small Business Deduction and the potential consequences of its expiration.

NFIB Senior Vice President for Advocacy Adam Temple, Rep. Lloyd Smucker (R-PA), and small business owners shared how the expiration of the 20% Small Business Deduction would impact Main Street, their employees and communities, and the broader U.S. economy.

Rep. Lloyd Smucker (R-PA) said:

“We’ve heard from small business owners how those additional dollars back into their pockets allowed them to reinvest in their businesses, reinvest in their workers, and reinvest in their communities. And the impact it would have if we allow [the Small Business Deduction] to expire, and the individual rates to expire, it will be the largest tax increase in our history. And so, our goal is to make this permanent. To provide the kind of stability that small business owners want to see. It’s a key provision of our agenda on what we think this [2025] tax package should look like.”

NFIB Senior Vice President for Advocacy Adam Temple said:

“In an NFIB survey among our members, what they told us was that if the [Small Business Deduction] is not made permanent, if it’s allowed to expire, that 44% of them will postpone or cancel capital investment, more than a third of them will have to postpone or cancel hiring, and in a time where inflation is a huge issue for all Americans, not just small businesses, 61% said that they would have to look at raising prices. So, that would have an impact across the economy.”

Nebraska Small Business Owner Candice Price, co-owner of Home Team Auto Sales, said:

“It’s very tough to be able to grow and maintain if you don’t know what’s coming. And a lot of small business owners are not aware that this deduction is going to go away. And then what do they do as they’re planning? One thing that we speak about here a lot is the direct impact of having this deduction. What we’re able to do. We can employ, we can buy equipment, we can grow, we can do the training that we need to do. But what we don’t always talk about is the indirect impact. So, my business for instance, we sell cars. We do a lot of business-to-business transactions. So now, if your business no longer has this deduction but you were planning to buy a new truck for your plumbing company or you were planning to buy another vehicle for one of your administrative assistants, now you can’t do that. That impacted my business. So not only now am I not receiving the deduction, I now have to increase my prices, and I now will have less sales as well.”

Georgia Small Business Owner Alison Couch, owner of Ignite Accounting & Business Advisors, said:

“[The Small Business Deduction] is such a widespread benefit. The deduction itself has been most beneficial when you compare it to things like depreciation or other tax credits that affect a specific industry. This is something that is more widespread horizontally and vertically when you look at small business owners.”

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[The Small Business Deduction] provides the opportunity to free up cash flow. That cash flow enables you to make capital investments and hire employees, and that’s very important for small business owners and having the ability to have the funds to do those types of investments.”

Please click here to watch the full event.

The 20% Small Business Deduction was created as a part of the 2017 tax law to level the playing field between small businesses and larger corporations. It has empowered small business owners to overcome the economic challenges of the last few years – but it’s set to expire at the end of 2025. The Main Street Tax Certainty Act would make the 20% Small Business Deduction permanent and avoid a massive tax hike on a majority of America’s small businesses.