The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, released a new report outlining the benefits the 20% Small Business Tax Deduction will bring to Colorado if made permanent. The report also spotlights that the 715,000+ small businesses in Colorado could face significantly higher taxes if Congress does not make the 20% Small Business Tax Deduction permanent this year. The report outlines the severe consequences for small businesses in Colorado and the broader U.S. economy that would result from the provision’s expiration, highlighting potential economic slowdown and increased financial strain on local businesses.

The report also highlights a stark contrast in tax rates between small businesses and their larger corporate competitors if the deduction is not made permanent. In Colorado, the C-Corp tax rate would remain at 25.4% while the small business rate would surge to 44%.

However, making the deduction permanent would lead to significant economic benefits, leaving the small business tax rate on a level playing field with its competitors. Additionally, Colorado is projected to gain 26,000 new jobs annually over the next 10 years if the deduction remains in place, including an annual GDP increase of $1.62 billion for the first decade and $3.34 billion per year beyond 2035.

View the report for Colorado here.

“Colorado small businesses create jobs and strong local economies,” said NFIB Colorado State Director Michael Smith. “If the 20% Small Business Tax Deduction expires, small businesses will be limited on hiring and investing in our communities. Congress must support small businesses and make this deduction permanent.”

The 20% Small Business Tax Deduction, a key provision of the Tax Cuts and Jobs Act of 2017, has empowered millions of small business owners to expand, hire employees, and increase wages. If Congress does not act to make it permanent this year, nine out of 10 small businesses will face a significantly higher tax burden, threatening jobs and economic stability nationwide.

For more information about NFIB’s advocacy efforts and to access Colorado’s report visit: https://www.nfib.com/wp-content/uploads/2025/04/NFIB-20-Small-Business-Deduction-Impact-CO.pdf