July 12, 2024

Rescuing Small Businesses: Congress’ Vital Role in Preventing a Devastating Tax Surge

Image Credits: Noam Galai/Getty Images

As lawmakers return to Washington, Main Street has a crucial message: Preserve the Small Business Deduction. This tax break, a centerpiece of the 2017 Tax Cuts and Jobs Act, allows nine out of ten small businesses to deduct up to 20% of their income.

This deduction has already injected billions of dollars into America’s mom-and-pop businesses, granting them tax relief to reinvest in their ventures, workforce, communities, and job creation. Without it, the 2017 law would have unfairly favored big corporations.

However, while the Tax Cuts and Jobs Act’s relief for corporations remains permanent, the lifeline for Main Street is temporary, set to expire in 2025. While this might seem distant in Washington D.C. terms, it’s approaching rapidly for small businesses. 

As the expiration date draws near, small businesses are retreating. In 2021, almost half of NFIB members reported that uncertainty over the deduction impacted their business plans, reducing investments in workers and communities.

Owners have consistently explained to Congress the profound impact of the Small Business Deduction. In June, Stephanie Camarillo, owner of Molly Maid of Boise and Treasure Valley in Idaho, testified before the Senate, “Jasmine is a single mom who felt trapped and unable to advance in her life. Because of the tax savings through the 20% Small Business Deduction, we were able to give Jasmine the raise and promotion she had earned, and now she is on our management team.”

Another small business owner, Kelly Moore of Zanesville, Ohio, testified that the Small Business Deduction allowed her to expand employee benefits significantly. Kelly said, “I am glad to tell you because of those changes made after … 2017, we were able not only to reinstitute not only health insurance but also pay 100% of the life insurance policy for our employees and all of their dental and vision.” 

Such success stories have unfolded repeatedly since 2017, involving millions of small businesses saving thousands of dollars annually. However, these funds will be taken away without swift congressional action, resulting in fewer raises, fewer job opportunities, and fewer small businesses preparing for the future.

Congress must stand by Main Street. The bipartisan-supported “Main Street Tax Certainty Act” can make this common-sense policy permanent. Lawmakers need to understand the urgency of this matter. Extending the Small Business Deduction now would have an immediate and profound impact, instilling confidence in millions of small businesses and fueling growth.

This deduction allows small business owners to retain more of their earnings within their businesses, enabling them to compete with larger corporate rivals. Main Street already contributes significantly to the economy, creating the majority of new jobs. Small businesses are ready to contribute even more when the country needs it most, making the Small Business Deduction a vital tool for a brighter economic future.

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