WASHINGTON, D.C. – Small businesses drive America’s economy, generating jobs and economic growth in communities big and small all across the country. The 2017 Trump tax cuts invested in this engine of economic growth by providing a 20 percent small business tax deduction – otherwise known as Section 199A – which helped ensure shops lining Main Streets across the nation could compete with larger companies and empowered job creators by giving them the resources to invest in their businesses and their workers.

But, right now, America’s small business community is staring down a massive tax increase. Twenty-six million businesses could see their top tax rate more than double to 43.4 percent – roughly 20 points higher than businesses face in Communist China.

Ways and Means Committee Chairman Jason Smith (MO-08) issued the following statement on the need to immediately protect America’s small businesses from a needless tax increase and give them the certainty now so that they can plan, invest, hire and grow:

“Raising taxes on small businesses will harm our local economies, the nation’s broader economic competitiveness, and the workers that keep Main Street running. The power of small businesses to drive innovation and job creation is exactly why Republicans included the 20 percent small business tax deduction in the 2017 Trump tax cuts. This policy has also made them better able to compete with larger corporations. Congress must act as soon as possible to protect America’s workers, families, farmers, and small businesses from the threat of higher taxes. If we actually want our economy to perform as it did before the pandemic, we need to immediately let small businesses do what they do best – innovate, grow, and hire, and they can’t do that with the threat of a massive tax increase over their head.”  

Key Facts:

• The 2017 Trump tax cuts provided a 20 percent small business tax deduction that helped put Main Street on a level playing field with large corporations.
• If the Section 199A tax deduction expires, 26 million job creators will see their top tax rate increase to 43.4 percent.

Key Policies from the Trump Tax Cuts Set to Expire if Congress Fails to Act:

• Congress only has 149 legislative days next year to act before the Trump tax cuts expire.
• The average taxpayer would see a 22 percent tax hike if the Trump tax cuts expire.
• A family of four making $80,610, the median income in the United States, would see a $1,695 tax increase if the Trump tax cuts expire.
  • This is worth about 9 weeks of groceries to a typical family of four across the country.
• 40 million families would see their household’s Child Tax Credit cut in half.
• 91 percent of all taxpayers would see their guaranteed deduction slashed in half. 
• 26 million small businesses would be hit with a 43.4 percent top tax rate if the Section 199A Small Business Deduction expires.
• 7 million taxpayers would be impacted by the return of the Alternative Minimum Tax.
• 2 million family-owned farms would have their Death Tax Exemption slashed in half next year.

READ: Trump Tax Cuts Expiration Would Force Small Businesses to Pay Higher Tax Rate Than Communist China