NFIB, a leading small business advocacy group, has revealed a report detailing the benefits of making the 20% Small Business Tax Deduction permanent for Arkansas. According to the report, without this measure, the approximately 280,000 small businesses in the state could incur higher taxes.
The deduction’s potential expiration is presented as a risk to both local businesses and the broader U.S. economy, with warnings of economic slowdown and increased financial burdens for small companies. The report also underscores the disparity in tax rates between small businesses and large corporations. Without permanence, Arkansas’ small business tax rate could climb to 43.5%, while the C-Corp rate stays at 25.3%.
Further, if maintained, the deduction could yield significant economic benefits, including the creation of 10,000 new jobs annually over the next decade and an annual GDP increase of $440 million initially and $909 million beyond 2035.
NFIB State Director Katie Burns commented, “The 20% Small Business Tax Deduction has made a big difference to Arkansas’ small businesses. It provided financial relief as local businesses dealt with inflation, labor shortages, and rising costs. If this deduction is allowed to expire, then these Main Street businesses will be faced with a steep tax hike on top of everything else, making it even harder for them to operate and support their communities.”
The deduction, introduced through the Tax Cuts and Jobs Act of 2017, has helped many small businesses expand and prosper. However, failure by Congress to make it permanent this year would result in higher tax burdens for nearly 90% of small businesses, posing threats to employment and economic stability.
