Yellowhammer Times

NFIB has released a new report detailing the consequences Alabama's small businesses could face if the 20% Small Business Tax Deduction, implemented as part of the Tax Cuts and Jobs Act of 2017, is not made permanent. The report emphasizes the steep rise in taxes the 449,000 small businesses in Alabama might experience if Congress fails to act. Without this deduction, the small business tax rate could spike to 44.6%, while the C-Corp rate remains at 27.5%, potentially leading to financial challenges and an economic slowdown.

The report also projects significant economic gains if the deduction continues. It estimates that the state could see 17,000 new jobs annually over the next decade, with a GDP increase of $841 million annually in the first 10 years and $1.74 billion per year beyond 2035.

“Small businesses form the foundation of our economy,” NFIB State Director Rosemary Elebash stated. “Unless Congress takes action and prevents this deduction from expiring at the end of this year, local business would face a significant tax hike that would make it much harder for them to grow, add jobs, and support their communities.”

By making the deduction permanent, NFIB argues that small businesses could compete on an equal footing with larger corporations, fostering growth and stability. Failure to extend the deduction could risk higher tax burdens for nine out of 10 small businesses, posing a threat not only to jobs but also to the wider U.S. economy.