26 million businesses could see their federal tax rate climb to 43.4 percent.

WASHINGTON, D.C. – American small businesses could be staring down a tax rate that will increase to 43.4 percent at the end of 2025 should Congress fail to act. The 2017 Trump tax cuts provided a 20 percent small business deduction that set Main Street on a level playing field with larger corporations. As a result, small business investment in their communities and the creation of new jobs powered an economic boom under President Trump. The looming expiration of this deduction threatens to roll back the clock, forcing business owners already burdened by the worst price spikes and interest rates in a generation, to consider which employees to lay off or facilities to close to pay higher taxes. 

Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement: 

“Small businesses in every district and state will pay higher taxes if the Trump tax cuts expire. Republican small business tax cuts set the stage for Main Street businesses to hire new employees, boost paychecks, build new facilities, and contribute to the greatest economy in my lifetime. Small businesses have repeatedly told Ways and Means Tax Teams that high prices and interest rates of the Biden-Harris Administration have made running a business unaffordable and they need relief. Just look at the facts. In the last year, businesses with the fewest employees have been forced to cut nearly 50,000 jobs. Higher taxes are clearly the last thing these businesses need.”

FACTSHEETS: How Every State Will Be Impacted By Loss Of Small Business Deduction

The Main Street Tax Team led by Rep. Lloyd Smucker (PA-11) and Ways and Means Republicans have traversed the country to listen to the concerns and priorities of small businesses ahead of the 2025 tax cliff. Collectively, Ways and Means Tax Teams have traveled to 20 states to hold over 120 listening sessions with American workers and job creators. Regardless of industry or state, small businesses are sending the same message: they will not recover from the Biden-Harris Administration’s failed policies if they are forced to pay more in taxes to Washington. 

VIDEO: Stopping a Tax Hike on Every American

Message to Washington

During Ways and Means hearings inside and outside Washington, small business owners have told Congress the negative impact the expiration of the 20 percent deduction would have on their businesses.

Hearing on Creating Opportunity in the Rust Belt | Erie, Pennsylvania 

Tom Tredway, Pennsylvania family-owned manufacturer: “When the 20 percent pass-through deduction expires at the end of 2025, and the individual tax rates increase, our tax bill will be significantly higher. Many small manufacturers are organized as pass-throughs, so our sector will be disproportionately harmed by the expiration of this deduction, severely hampering our growth trajectory.”

Hearing on Pro-Growth, Pro-Growth Tax Policy | Iowa State Fair

Rep. Claudia Tenney (NY-24): “Most of the businesses, as Ms. Pol said, in our communities are driven by small business owners, including our farmers. And so, we are just grateful to all of you for putting it in your words exactly what the catastrophic results could be if we don’t continue with these issues… But you talked about 199A, if it should expire, could you tell me just briefly what the operational changes you would have to make in the business if that were to happen?”

Lana Pol, Iowa small business owner: “Well, currently, I think what we would do is stop investing, you know. We wouldn’t be able to expense the equipment, you know. We wouldn’t have the extra money to reinvest into our employees and anything else that we wanted to pursue.”

Hearing on Building On the Success of the Trump Tax Cuts | Washington, D.C.

Rep. Lloyd Smucker (PA-11): “Mr. Ervin, I know you mentioned this, but could you expand on how a 43.4 percent tax rate would potentially impact your business if we do not make 199A permanent?”

Michael Ervin, West Virginia small business owner: “Simply put: ultimately, a ‘Closed’ sign would go up in my window, and not only in my window, but on the windows of most of the other businesses on my street if we had to pay that.”

Boots on the Ground
Ways and Means Republicans are talking directly with small businesses to hear and see the effects of the potential expiration of the 199A small business deduction. For many communities, these businesses employ the majority of private sector workers and are the heartbeat of their local economy. 

Promoting Growth |Texas

Rep. Beth Van Duyne (TX-24), member of the Main Street Tax Team, held a site visit and roundtable at Republic National Distributing Company with a variety of businesses including roofers, electrical contractors, property managers, and others. 

Supporting Jobs | Tennessee 

Rep. David Kustoff (TN-08) held a roundtable discussion with local small businesses, including wine and spirits wholesalers, contractors, and barbershop owners. Similar businesses who also use the 20 percent deduction employ 61 percent of workers in the district. 

Helping Small Businesses Survive | Oklahoma

Rep. Kevin Hern (OK-01) held a roundtable with 25 small businesses from various industries. A theme of the listening session was how the 20 percent deduction has served as a lifeline for businesses struggling after four years of failed Biden-Harris policies.

Tax Fairness for Mom and Pop Businesses | North Carolina

Rep. Greg Murphy (NC-03) hosted a roundtable with small businesses like distribution and farming, to hear how the Trump tax cuts benefited them. 70 percent of private sector workers in this district are employed by small businesses while corporations employ less than 10 percent.

FACTSHEET: Key Individual Tax Policies from the Trump Tax Cuts Set to Expire Across America
READ: Ways and Means Tax Teams