COLUMN: Make the Small Business Deduction Permanent

This morning, The Advocate newspaper published a guest editorial by NFIB State Director Leah Long about why it’s important for Congress to make the 20% small business deduction permanent.

By LEAH LONG

Running a small business isn’t easy, even in good times, and these aren’t good times. Inflation is raising the cost of everything from raw materials to wages. It’s also changing people’s spending habits, making it even harder for small businesses to pay their bills and keep the doors open.

Unless Congress moves fast, it will become even harder for local businesses to stay afloat.

Congress passed a bill in 2017 called the Tax Cuts and Jobs Act. It included a section that lets small businesses deduct 20 percent of qualified income from their federal income taxes. It was the largest deduction for small businesses in U.S. history. It had a big impact on communities by making it easier for Main Street businesses to grow and create jobs.

However, this 20 percent deduction wasn’t permanent. It’s set to expire on Jan. 1, 2026.

If that happens, nine out of 10 small businesses nationwide will see a massive tax increase. They won’t have as much money to run their businesses or invest in their communities.

Small businesses operate on notoriously tight profit margins, anyway. So, with the cost of doing business already going through the roof, a 20 percent tax increase could be enough to put some businesses out of business.

That’s why Congress needs to pass the Main Street Tax Certainty Act. This bill, which has the support of both Democrats and Republicans, would make the 20 percent small business deduction permanent.

Small business owners are nervous right now. The NFIB Small Business Optimism Index rose 1 point in June to 91.5, which was good, but June marked the 30th consecutive month that the index was below the 50-year average.

Congress included the 20 percent business deduction in the 2017 tax bill to give local businesses a fighting chance against their big corporate competitors. If the small business deduction is allowed to expire, that means the 2017 tax bill would have almost entirely helped Wall Street, not Main Street.

Making the 20 percent deduction permanent isn’t simply about giving local businesses a tax break. It’s about stopping the cycle of uncertainty caused by temporary extensions. It’s about assuring owners they can afford to grow their businesses and support their communities without the fear of financial instability.

Most of Louisiana’s congressional delegation are already on board. Senators Bill Cassidy and John Kennedy are co-sponsoring the Senate version of the Main Street Tax Certainty Act. House Speaker Mike Johnson and Representatives Garrett Graves, Clay Higgins, and Julia Letlow are co-sponsors of the version pending in the House.

Small business is the engine that drives Louisiana’s economy. Small businesses account for most businesses in the state and employ almost half of Louisiana’s private-sector workforce. Small businesses buy ads in our children’s yearbooks and support local charities.

Passing the Main Street Tax Certainty Act would make these local businesses financially stronger. It would ease a lot of the financial uncertainty making it difficult Louisiana’s small businesses to plan ahead. If we can do that, we can help ensure a brighter economic future for everyone.