Beehive State News

The potential extension of the 20% Small Business Deduction has emerged as a significant topic in Utah, according to recent reports. Presently, the deduction is set to expire at the conclusion of 2025, but making it a permanent fixture in the U.S. tax code could be highly beneficial for Utah's economy.

Two reports shed light on this issue last week, emphasizing the importance of preserving the deduction. The NFIB released its 2024 Tax Survey, alongside a study conducted with Ernst & Young (EY), examining the impact of the Small Business Deduction first introduced in the 2017 Tax Cuts and Jobs Act.

The EY report estimates that making the deduction a permanent component of the tax code would result in a growth of approximately 1.2 million job equivalents at small businesses annually in the first decade. This number could rise to 2.4 million jobs each year subsequently. Additionally, extending the Section 199A deduction could enhance the U.S. GDP attributable to small businesses by $75 billion annually in the initial ten years and increase to $150 billion each year later on.

For Utah, extending the deduction could mean an annual addition of 16,000 jobs and approximately $816 million in GDP in the first decade. Expectations beyond 2035 suggest growth to 30,000 jobs and $1.7 billion each year.

The NFIB's Tax Survey reveals that if the deduction expires, 61% of small businesses plan to increase prices, 44% would delay or cancel capital investments, and 36% might postpone hiring. A smaller percentage may freeze wages or reduce benefits, with others aiming to become more efficient.

Jeff Brabant, vice president of Federal Government Relations for NFIB, addressed the Senate Committee on Finance. He stated, “Members of Congress should ask themselves if they really believe it when they say, ‘small businesses are the backbone of America.’ If they truly believe that statement and value small businesses in their communities, then making the 20% small business deduction permanent should be an easy decision.”

NFIB highlights that the typical member employs between one and nine people, with average gross sales of approximately $500,000 annually. For more on the latest Utah small-business news, visit www.nfib.com/utah.

NFIB, a nonprofit, member-driven association, has been advocating for small and independent business owners for 80 years, both in Washington D.C. and across all 50 state capitals. More information can be found on their website nfib.com.