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 South Dakota if made permanent. The report also spotlights that the 94,000+ small businesses in South Dakota 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 South Dakota 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 South Dakota, the C-Corp tax rate would remain at 21% while the small business rate would surge to 39.6%.

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, South Dakota is projected to gain 4,000 new jobs annually over the next 10 years if the deduction remains in place, including an annual GDP increase of $197 million for the first decade and $407 million per year beyond 2035.

View the report for South Dakota here.

“South Dakota small businesses invest in our local economies and youth programs,” said NFIB South Dakota State Director Jason Glodt. “If the 20% Small Business Deduction expires, Main Street will face a huge tax hike that will limit their ability to further invest in our communities. Congress must protect small businesses and make the small business tax 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 South Dakota’s report visit: https://www.nfib.com/wp-content/uploads/2025/04/NFIB-20-Small-Business-Deduction-Impact-SD.pdf