The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, released a new report outlining the benefits the 20% Small Business Tax Deduction will bring to Arizona if made permanent.
The report also spotlights that the 678,000+ small businesses in Arizona could face significantly higher taxes if Congress does not make the 20% Small Business Tax Deduction permanent this year. The report outlines the severe consequences for small businesses in Arizona and the broader U.S. economy that would result from the provision’s expiration, highlighting potential economic slowdown and increased financial strain on local businesses.
The report also highlights a stark contrast in tax rates between small businesses and their larger corporate competitors if the deduction is not made permanent. In Arizona, the C-Corp tax rate would remain at 25.9%, while the small business rate would surge to 42.1%.
However, making the deduction permanent would lead to significant economic benefits, leaving the small business tax rate on a level playing field with its competitors. Additionally, Arizona is projected to gain 26,000 new jobs annually over the next 10 years if the deduction remains in place, including an annual GDP increase of $1.41 billion for the first decade and $2.9 billion per year beyond 2035.
View the report for Arizona here.
“Losing the small business deduction would devastate Arizona’s small businesses and the state’s economic momentum,” said NFIB Arizona State Director Chad Heinrich. “Taking a hit to both our state’s GDP and missing out on tens of thousands of jobs each year is the serious consequence of Congress’s inaction. We need the deduction made permanent.”
The 20% Small Business Tax Deduction, a key provision of the Tax Cuts and Jobs Act of 2017, has empowered millions of small business owners to expand, hire employees, and increase wages. If Congress does not act to make it permanent this year, nine out of 10 small businesses will face a significantly higher tax burden, threatening jobs and economic stability nationwide.
