Small business owners could face major tax increases at the end of 2025 and are urging tax deductions for the newly elected chambers and administration.
As part of the 2017 Tax Cuts and Jobs Act (TCJA), small business owners were allowed to deduct up to 20 percent of their income to help cover their costs. The deduction is set to expire at the end of 2025, sparking conversations among many constituents and lawmakers about whether to terminate, extend or permanently establish it.
Lawmakers and business owners chimed in on the issue at the Nov. 19 event “The 20% Small Business Tax Deduction: Why It Matters & What’s Next?” hosted by The Hill and the National Federation of Independent Businesses.
Rep. Lloyd Smucker (R-Penn.) serves on the Ways and Means Committee and is the lead sponsor of the Main Street Tax Certainty Act, which would make the tax deductions permanent. He hopes to pass the package with bipartisan support.
“There’s perhaps a historical opportunity here, because we’re going to be seeing the largest tax policy package put forward since 2017,” he said. “We want an economy that is working for the American people. We want more people to be able to participate in the economy. We want an economy that incentivizes business development.”
Rep. Brad Schneider (D-Ill.) serves alongside Smucker on the committee and participated in a bipartisan discussion hosted by The Hill’s Editor-in-Chief Bob Cusack. Schneider referred to the 2017 bill, President-elect Trump’s signature tax law, and how it did not receive a single Democratic vote.
Smucker’s proposed bill currently has 192 co-sponsors, including two Democrats. Schneider is not one of them.
“We can go down a partisan path,” he said. “I said this when I thought the Democrats were going to take the majority. It would have been wrong to do for the Democrats. I think it’s equally wrong to do for the Republicans. We have to find a bipartisan way to responsibly fund our government and decide where we want to invest and make sure we secure our children’s future and our community’s strength.”
Panelists comprised of small business owners and representatives from nonprofit groups also discussed the impacts of the 2017 tax cut and various scenarios for the future, saying the current tax deduction allows small businesses to compete with larger corporations and in turn reinvest in their communities.
Small business owners like Candice Price, who owns a car dealership in Omaha, said she directly benefit from tax deductions to increase sales, which helps her turn money back into her community’s local economy and support other small businesses.
She added that many business owners may not be aware of the deduction’s potential end, and the uncertainty of future tax cuts makes planning difficult for business owners.
“This isn’t about having a negative effect on large businesses,” she said. “We believe in corporations; we believe in what they do to impact our economy. We also just need everyone to believe in what we do as small business owners to impact our economy as well.”
