Mike Donohue Senior Media Manager – Northeast | Official Website
Mike Donohue Senior Media Manager – Northeast | Official Website
The National Federation of Independent Business (NFIB), a leading small business advocacy group, has released two reports addressing the potential impact of the expiration of the federal 20% Small Business Tax Deduction. This deduction is set to expire at the end of next year, and its future remains uncertain as Congress deliberates.
In collaboration with NFIB, Ernst & Young (EY) conducted a macroeconomic analysis examining the effects of making this tax deduction permanent. The findings suggest that extending the deduction could result in significant benefits for small businesses. The analysis forecasts the creation of 1.2 million new jobs annually for the first ten years and 2.4 million jobs each year thereafter if the deduction becomes permanent. Additionally, it projects a $750 billion increase in GDP within the small business sector over ten years and a $150 billion annual rise after that period.
David Clough, NFIB Maine State Director, emphasized the local implications: “This study demonstrates the positive impact the Small Business Deduction has on Maine’s small businesses and why it’s so important that Congress makes it permanent.” He urged federal lawmakers to support legislation that would make this deduction permanent, citing potential job creation and economic growth in Maine.
The analysis also revealed that 33 million small pass-through businesses employ over 68 million workers across the United States. In 2021 alone, 25.9 million of these businesses claimed the deduction.
A separate NFIB Tax Survey highlighted concerns among small business owners about potential changes to tax policy. According to the survey, 59% of respondents believe eliminating this deduction would negatively affect their business operations. Furthermore, many reported they might raise prices or delay investments and hiring if faced with higher taxes.
NFIB President Brad Close remarked on the broader implications: “By allowing small business owners to keep more of their hard-earned money, the 20% Small Business Deduction empowers middle class small business owners to grow their businesses.” He stressed that allowing this deduction to expire could lead to substantial tax increases for millions of small businesses.
For further information on these reports and their findings, readers are encouraged to visit NFIB's website or access specific documents detailing these analyses.
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