As legislators prepare to reconvene in Washington, small business owners across the nation are appealing for the continuation of the Small Business Deduction, a critical component of the 2017 Tax Cuts and Jobs Act. This provision allows 90% of small businesses to claim up to a 20% deduction on their earnings, resulting in billions of dollars in tax savings. These savings enable reinvestment in businesses, employees, and local communities, as well as job creation.
Small Businesses Urge Congress to Prioritize Continuation of Vital Deduction
Business owners stress the importance of this deduction for their survival and growth, urging lawmakers to prioritize its continuation in future legislation. This, they argue, will support economic recovery and benefit local businesses and communities.
Impending Expiration of Deduction Could Hurt Small Businesses and Local Economies
Without the Small Business Deduction, the 2017 legislation would disproportionately favor large corporations. However, the deduction is currently temporary and set to expire in 2025. Consequently, small businesses face a substantial tax increase that could hinder job creation, economic growth, and investment in communities. To counteract potential negative impacts, experts recommend that small business owners begin strategizing and preparing for these changes. Alternative financing options, engagement with industry peers, and consultation with tax professionals can help entrepreneurs protect their businesses and ensure long-term growth.
Uncertainty Around Deduction’s Fate Affects Business Strategies and Investments
The growing ambiguity surrounding the deduction has already impacted business strategies for almost half of the National Federation of Independent Business (NFIB) members in 2021. This has led to reduced investment in employees and communities, which may result in slower growth rates and fewer job opportunities, particularly in small businesses that form the backbone of many communities. The uncertainty highlights the need for clearer regulations and tax policies to ensure thriving small businesses and stable economic environments.
Small Business Deduction Supports Employee Investments and Benefits
Small business owners like Stephanie Camarillo and Kelly Moore have shared examples of how the Small Business Deduction has allowed them to invest in their workers and increase their benefits. This tax incentive provides significant relief to small businesses, allowing them to remain competitive in the market and foster growth. As a result, the deduction not only boosts the local economy but also promotes job sustainability, improving the overall quality of life for employees and communities.
Congress Must Act to Ensure Continuation of Deduction for Small Businesses
Despite the clear benefits for millions of small businesses that have utilized the deduction, Congress must act quickly to prevent its expiration from hampering future growth and investment. By ensuring a timely extension or even making the deduction permanent, Congress can provide the necessary support and stability for small businesses to thrive. This not only promotes sustainable growth for companies but also stimulates the overall economy through increased job creation and innovation.
Bipartisan Support for “Main Street Tax Certainty Act” to Stabilize Small Business Deduction
The “Main Street Tax Certainty Act” has gained bipartisan support, offering an opportunity to establish the Small Business Deduction as a permanent feature and ensure the continued success of small businesses across the nation. This legislation aims to ease the financial burden on entrepreneurs and promote economic growth within local communities. By solidifying the Small Business Deduction, lawmakers hope to foster an environment conducive to the creation and expansion of small businesses, thereby encouraging job creation and sustainable development.
Frequently Asked Questions
What is the Small Business Deduction?
The Small Business Deduction is a provision of the 2017 Tax Cuts and Jobs Act that allows 90% of small businesses to claim up to a 20% deduction on their earnings, resulting in billions of dollars in tax savings for businesses.
Why is the Small Business Deduction important?
This deduction is crucial for the survival and growth of small businesses as it enables them to reinvest in their businesses, employees, and local communities. It also encourages job creation and supports economic recovery, benefiting both local businesses and communities.
When is the Small Business Deduction set to expire?
The Small Business Deduction is currently temporary and set to expire in 2025. This could lead to a substantial tax increase for small businesses, negatively impacting job creation, economic growth, and investment in communities.
What is the “Main Street Tax Certainty Act”?
The “Main Street Tax Certainty Act” is a bipartisan legislation that aims to make the Small Business Deduction permanent, easing the financial burden on entrepreneurs and promoting economic growth within local communities. This would help to establish a supportive environment for the creation and expansion of small businesses, thereby encouraging job creation and sustainable development.
How can small business owners prepare for potential changes to the deduction?
Experts recommend that small business owners should begin strategizing and preparing for these changes by exploring alternative financing options, engaging with industry peers, and consulting with tax professionals to protect their businesses and ensure long-term growth.
First Reported on: foxbusiness.com
Featured Image Credit: Photo by Ketut Subiyanto; Pexels; Thank you!
