Impact of Small Business Deduction Expiration Discussed in Washington, D.C.

WASHINGTON, D.C. (Nov. 20, 2024) – The National Federation of Independent Business (NFIB), recognized as the leading advocate for small businesses in the nation, recently hosted an important event alongside The Hill. This gathering brought together influential small business leaders, tax experts, policymakers, and concerned citizens to thoroughly explore the implications surrounding the Small Business Deduction and the dire consequences that could arise from its impending expiration.

During this event, NFIB’s Senior Vice President for Advocacy, Adam Temple, along with Representative Lloyd Smucker (R-PA) and various small business owners, articulated the serious repercussions that the expiration of the 20% Small Business Deduction could inflict on local businesses, their employees, and the surrounding communities. They emphasized the broader economic impact on the United States as a whole.

Insights from Rep. Lloyd Smucker

Rep. Lloyd Smucker (R-PA) articulated the following points:

“We’ve received feedback from small business owners about how the extra funds regained from the deduction have significantly aided their efforts to reinvest in operations, support their employees, and uplift their communities. Should [the Small Business Deduction] be allowed to expire, coupled with the individual tax rates set to increase, we will witness the most substantial tax hike in American history. Our objective is to ensure its permanence to deliver the kind of stability that entrepreneurs desperately need. It stands as a cornerstone of our agenda related to the 2025 tax framework.”

Adam Temple on Business Impact

NFIB Senior Vice President for Advocacy Adam Temple shared:

“According to an NFIB survey, our members indicated that if the [Small Business Deduction] is not solidified as a permanent benefit, nearly 44% would be forced to either postpone or eliminate their capital investments. Furthermore, more than one-third would delay or abstain from hiring new employees. In a time where inflation looms large, affecting all Americans—not solely small businesses—61% indicated they would consider raising prices. This would undoubtedly trigger rippling effects throughout the economy.”

Voices from Small Business Owners

Insights from Nebraska Small Business Owner Candice Price:

“Navigating growth and sustainability becomes exceedingly difficult when the future remains uncertain. A significant number of small business owners are unaware that this pivotal deduction is at risk. As they strategize their future, clarity is crucial. We often highlight the direct benefits of retaining this deduction—such as our ability to hire staff, acquire essential equipment, and provide necessary training. Equally important, however, are the indirect influences. My business, for example, focuses on car sales, and much of our trade relies on business transactions. If a contractor is planning to invest in a new vehicle for operations but suddenly loses the deduction, that not only affects their decision but directly impacts my sales as well. Without the deduction’s benefit, my operating costs will rise, leading to increased prices and diminished sales.”

Georgia Small Business Owner Alison Couch also elaborated:

“The Small Business Deduction serves as an extensive benefit across the board. When evaluated against other provisions like depreciation or specialized tax credits, it’s evident that this deduction provides broader advantages for small business owners, cutting across various sectors. It is a vital lifeline to sustain operations and stimulate growth.”

The Essential Role of AI legalese decoder

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The 20% Small Business Deduction, established as part of the 2017 tax reform, was designed to create equitable conditions between small businesses and larger corporate entities. It has played a pivotal role in aiding small business owners to navigate through economic hardships over the past few years. However, the looming expiration date at the end of 2025 has raised urgent calls for action. The Main Street Tax Certainty Act is proposed legislation aimed at making the 20% Small Business Deduction a permanent feature of the tax landscape, thereby preventing a potential massive tax hike for the majority of America’s small businesses.

To view the full discussion from this critical event, please click here.