The National Federation of Independent Business (NFIB) recently sponsored an event with The Hill to discuss the potential expiration of the 20% Small Business Deduction, which is part of line 13 on Form 1040. This deduction was established under the 2017 Tax Cuts and Jobs Act to provide small businesses with tax relief similar to that enjoyed by larger corporations. However, its expiration at the end of next year could lead to significant tax increases for small business owners unless Congress intervenes.
Adam Temple, Senior Vice President of Advocacy at NFIB, highlighted the uncertainty faced by small business owners: “Planning is huge. A mom-and-pop, they’re trying to make it through the next month and the next year. But they need to be able to have some level of certainty that they’re going to be able to do that. The NFIB Uncertainty Index peaked in October. There’s a lot of uncertainty about what the future looks like, and a lot of this is because they don’t know what their taxes are going to look like after 2025.”
Rep. Lloyd Smucker (R-PA), a member of the U.S. House Ways & Means Committee, expressed optimism about bipartisan efforts: “I do think there’s a real opportunity to do this in a bipartisan way…We want an economy that is working for the American people. We want more people to be able to participate in the American economy. We want an economy that incentivizes business development – we want to make it easier to start a new business, and it incentivizes additional investment that will make it easier to grow a business."
Candice Price, an NFIB member and co-owner of Home Team Auto Sales, shared her concerns about planning without knowing future tax obligations: “It’s very tough to be able to grow and maintain if you don’t know what’s coming,” she said.
The panel also included other notable figures such as Alison Couch from Ignite Accounting & Business Advisors; Rep. Brad Schneider (D-IL); Dana Peterson from The Conference Board; and Joby Young from the American Farm Bureau Federation.
The event emphasized that nine out of ten small businesses could face substantial tax hikes if Congress does not pass legislation like the Main Street Tax Certainty Act, which aims to make this deduction permanent.
NFIB encourages small business owners across America—over 95,000 have already signed—to join their petition against this potential tax increase.
