Detroit City Wire

The National Federation of Independent Business (NFIB) State Director, Leah Long, has expressed concern over the potential expiration of the 20% federal tax deduction for small businesses. Her editorial was published in the Clarion Ledger, emphasizing the importance of this deduction for small business sustainability.

The 20% Small Business Deduction, part of Section 199A, allows small businesses organized as pass-through entities to deduct up to 20% of qualified business income. This provision was introduced in 2017 with the aim of aligning small business tax rates more closely with those of larger corporations. However, it is set to expire in 2025.

Long warns that if Congress does not act to preserve this deduction, "nine out of 10 small businesses nationwide, including thousands in Mississippi," could face immediate tax increases. This financial strain could potentially force many businesses to close permanently.

According to an NFIB member ballot, a significant majority—91%—support making the deduction permanent. Additionally, nearly half of small business owners have reported that uncertainty surrounding expiring tax provisions is impacting their future planning abilities.

Current economic challenges such as inflation are already affecting these businesses by increasing costs and reducing profits. The Tax Cuts and Jobs Act of 2017 provided substantial deductions for American businesses but did not extend permanent relief to all sectors equally. While Wall Street's deductions were made permanent, those benefiting Main Street are due to lapse.

Mississippi's small business community is advocating for congressional action through support for the "Main Street Tax Certainty Act." This legislation aims to make the existing deduction permanent and provide stability for local enterprises.

Small business owners are currently experiencing heightened anxiety about their financial futures despite a slight increase in optimism reflected by a rise in the NFIB Small Business Optimism Index. Inflation remains a critical issue, cited by 25% as their primary operational challenge.

The call from Mississippians includes appreciation for congressional members like Senators Roger Wicker and Cindy Hyde-Smith and Representatives Trent Kelly, Michael Guest, and Mike Ezell who have co-sponsored efforts towards securing this legislative change.

Passing the Main Street Tax Certainty Act would alleviate much uncertainty hindering growth plans among small businesses by ensuring they do not face unexpected tax hikes post-2025. Long concludes that supporting these measures will benefit both local communities and broader economic health by fostering a more stable environment for entrepreneurs.