Jeff Brabant, the Vice President of Federal Government Relations for the National Federation of Independent Business (NFIB), recently participated in Bloomberg's Talking Tax Podcast. The discussion centered around the significance of making the 20% small business deduction a permanent feature in tax legislation.
"In 2021, 26 million small businesses used the 20% Small Business Deduction. Those are just small businesses as defined by the Small Business Administration. It has been very beneficial to small business owners," Brabant stated, highlighting its impact on numerous enterprises.
The deduction, formally known as Section 199A and established in 2017, permits pass-through entities to deduct up to 20% of qualified business income. This provision aims to align the tax rates of smaller enterprises with those of larger corporations. As it stands, this benefit is set to expire at the end of this year, potentially leading to increased taxes for over 30 million small businesses across America.
During his conversation with Bloomberg Tax reporter Zach Cohen, Brabant emphasized the potential consequences if Congress does not act to maintain this deduction. "NFIB surveyed [our members] earlier this year and asked, ‘What would you do if this tax deduction goes away?” And what the small business owners in the survey said is over 60% would increase prices, over 40% would delay or cancel capital investments, and over 20% would have to reduce compensation," he explained.
Brabant's participation in the podcast underscores NFIB's efforts to persuade lawmakers in Washington D.C. to ensure that this tax relief measure remains available for small business owners.
