Julia Hammond writes that the 20% small business deduction is set to expire in 2025
NFIB State Director Julia Hammond writes in today’s edition of The Virginian-Pilot about why Congress needs to make the 20% small business deduction permanent. The deduction will expire in 2025 unless Congress takes action soon.
Congress passed a bill in 2017 that cut business taxes. Wall Street’s tax breaks were permanent. Main Street’s weren’t, and they’re going to expire unless Congress votes to stop it.
That’s why more of Virginia’s congressional delegation needs to support the bipartisan Main Street Tax Certainty Act.
Without it, many of Virginia’s small businesses will be hit with a 20% tax hike overnight. And with inflation driving up the cost of everything from raw materials to wages, a 20% tax hike could put some Main Street businesses out of business.
In 2017, Congress passed a law that included a provision allowing small businesses to deduct 20% of business income from their federal taxes. This really helped local businesses throughout the commonwealth.
This federal tax deduction allows small businesses to deduct up to 20% of their qualified business income. Small businesses use those dollars to invest in their employees and business operations, and those tax savings have protected them against inflation, hiring shortages and supply chain disruptions.
Congress, though, set this deduction to expire in 2025.
That’s why Virginia’s small business owners are asking their members of Congress to pass the Main Street Tax Certainty Act.
Small business owners need stability. They don’t have it right now, and that creates uncertainty. The NFIB Small Business Optimism Index rose 2.2 points in July to 93.7, the highest reading in more than two years, but it was still the 31st consecutive month that the index was below the 50-year average.
By passing the Main Street Tax Certainty Act, Congress can stop the cycle of uncertainty caused by temporary extensions. Right now, small business owners don’t have the certainty and confidence they need to make big investments. They simply don’t know if the 20% small-business deduction will be part of the equation after 2025.
Until they have that clarity, they can’t do all the things they want to do — all the things they need to do — to grow their businesses, create jobs and support their communities.
The Main Street Tax Certainty Act enjoys the support of both Democrats and Republicans on Capitol Hill. Bipartisan support of anything is rare these days in Washington.
But of the 11 U.S. representatives from Virginia, only four have signed on as cosponsors of the bill: Ben Cline, Bob Good, Jennifer Kiggans and Robert Wittman. Neither of our U.S. senators is on board. That’s not good enough for the small business owners who sent them to Washington.
Virginia’s economy is built on its small businesses. According to the U.S. Small Business Administration, small businesses account for 99.5% of all businesses in the commonwealth. And while big business grabs most of the headlines, more than 45% of Virginians who work for a small business.
Small businesses help our economy by creating jobs, sponsoring local charities and civic organizations, and providing goods and services you won’t find at chain stores. Virginia needs small businesses to maintain a strong and diverse economy, but small businesses operate on notoriously thin profit margins. Inflation already is taking a toll on many of Virginia’s small businesses. They can’t afford a 20% tax hike. For some businesses, that could be the tipping point, the thing that decides it’s time to close up, and we can’t afford to lose our small businesses.
That’s why we need our entire congressional delegation to make the small business deduction permanent by supporting the Main Street Tax Certainty Act. We need to tell our elected leaders what Main Street means to Virginia’s economy and remind them that by helping small businesses, they’ll help everyone.
