Small business owners could face a major tax increase at the end of 2025, and are seeking tax relief from the newly elected Congress and government.
As part of the Tax Cuts and Jobs Act (TCJA) of 2017, small business owners were allowed to deduct up to 20% of their income to cover costs. The credit is set to expire at the end of 2025, sparking debate among many voters and lawmakers over whether to end it, extend it or make it permanent.
Lawmakers and business owners weighed in on the issue Tuesday at “20% Small Business Tax Credit: Why Is It Important and What's Next?” Event sponsored by The Hill and the National Federation of Independent Business.
Congressman Lloyd Smucker (R-Pennsylvania) serves on the House Ways and Means Committee. Main Street Tax Security Actwhich makes the tax credit permanent. He hopes to pass the bill with bipartisan support.
“There is probably a historic opportunity here, as this will be the largest tax policy package proposed since 2017,” he said. “We want an economy that works for the American people. We want more people to participate in the economy. We want an economy that fosters business development. I’m here.”
Rep. Brad Schneider (D-Ill.), who serves on the committee with Mr. Smucker, participated in a bipartisan debate hosted by The Hill Editor-in-Chief Bob Cusack. Schneider referenced the 2017 bill, President-elect Trump's signature tax law, and how it received no Democratic votes.
Mr. Smucker's bill has 192 co-sponsors, including two Democrats. Schneider is not one of them.
“We could go down a partisan path,” he said. “I said this when I thought the Democrats were going to have a majority. It would have been wrong for the Democrats. I think it was just as wrong for the Republicans. We need to govern responsibly. We must find a bipartisan way to fund it, decide where to invest it, and ensure the future of our children and the strength of our communities.”
A panel of small business owners and nonprofit representatives also discussed the impact of the 2017 tax cuts and various future scenarios, noting that the current tax cuts will help small businesses compete with larger businesses and, in turn, provide reinstatement to their communities. He said it would be possible to invest.
Small business owners like Candace Price, who owns a car dealership in Omaha, Nebraska, directly benefit from tax credits to increase sales, which in turn puts money back into the local economy. He said it helps support other small businesses.
He added that many business owners may not be aware that the deduction could end, and the uncertainty of future tax cuts makes it difficult for business owners to plan.
“This is not about hurting big companies,” she says. “We believe in businesses. We believe in what they do to impact our economy. We also believe in what they do as small business owners to impact our economy.” We need everyone to believe that.”
