News Summary
The NFIB’s report highlights the necessity of making the 20% Small Business Tax Deduction permanent in California to protect the state’s small businesses from increased tax rates. Without this critical relief, small businesses could face tax rates as high as 52.9%, which may lead to economic challenges and job losses. The report emphasizes potential job growth and GDP increases if the deduction is maintained, showcasing strong bipartisan support for its permanence among the public.
California Report Highlights Economic Impact of the 20% Small Business Tax Deduction
The National Federation of Independent Business (NFIB) released a comprehensive report on April 15, 2025, emphasizing the critical need to make the 20% Small Business Tax Deduction permanent in California. The findings illustrate that without this significant tax relief, the state’s 4.2 million small businesses may confront considerably higher tax rates, potentially leading to economic challenges and job losses.
If the 20% Small Business Tax Deduction is not made permanent, small businesses could see their tax rate soar to 52.9%, while the C-Corporation tax rate will remain comparatively lower at 29.84%. This disparity poses a serious threat to small business viability and growth. John Kabateck, NFIB California State Director, has underscored that the expiration of this deduction could result in a massive tax increase, causing financial strain on local businesses.
The report highlights that maintaining this deduction could yield significant economic benefits. California stands to gain an estimated 141,000 new jobs annually over the next decade if the deduction remains in place. Additionally, the annual gross domestic product (GDP) is projected to increase by $9.78 billion during the first decade and may reach $20.2 billion per year beyond 2035.
A Strong Consensus Among Americans
A recent poll indicated overwhelming bipartisan support for making the 20% Small Business Tax Deduction permanent. Over 80% of Americans believe that supporting small businesses should be a key priority for the federal government. Furthermore, 93% of respondents agree that making the tax deduction permanent should be a top Congressional concern. Concerns regarding the potential adverse effects of the expiration were voiced by 95% of those surveyed.
The Importance of Small Businesses in California
Small businesses are a vital component of California’s economy, representing 99.9% of all businesses in the state and collectively employing over 7 million people. The NFIB has been advocating for small and independent businesses for more than 80 years, and this report stresses that the 20% Small Business Tax Deduction has been instrumental in empowering entrepreneurs to expand their operations, hire new employees, and provide better wages.
Designed as part of the Tax Cuts and Jobs Act of 2017, this tax deduction aims to create a more equitable tax environment for small businesses. However, the looming expiration of the deduction raises concerns about the potential for economic slowdown, which could have far-reaching consequences for nine out of ten small businesses nationwide.
Looking Ahead
With the clock ticking on the 20% Small Business Tax Deduction, small businesses across California and the nation are pressing for action. The NFIB report serves as a clarion call for lawmakers to prioritize small business support by ensuring the permanence of this vital tax relief measure. Failure to do so may not only jeopardize local economies but also undermine the foundational strength of small businesses, which have been key to job creation and economic stability.
In conclusion, the implications of the NFIB’s findings are clear: making the 20% Small Business Tax Deduction permanent is essential for fostering a flourishing small business environment in California, which may drive job growth, increase GDP, and ensure the continued success of the state’s economy.
Deeper Dive: News & Info About This Topic
- NFIB Report on Small Business Tax Deduction
- LendingTree: Small Business Tax Rate Overview
- ADP: Retirement Plans for California Small Businesses
- Forbes: PTET Tax Strategy for California Business Owners
- Wikipedia: Small Business
