First State Times

The National Federation of Independent Business (NFIB), recognized as Delaware’s leading small business advocacy organization, has released a report regarding the potential impact of a small business tax hike. According to the NFIB, the 20% Small Business Tax Deduction is crucial for Delaware's small businesses. The report stresses that if the deduction is not made permanent by Congress, approximately 104,000 small businesses in the state may face significantly higher taxes, which could harm the local economy.

One of the key comparisons in the report is between potential tax rates for small businesses and larger corporations. Without the permanency of the deduction, the small business tax rate in Delaware could escalate to 46.2%, while the C-Corp rate would continue at 29.7%. The temporary nature of the deduction contrasts starkly with these figures.

If Congress decides to make the deduction permanent, NFIB projects notable economic advantages for Delaware, including the creation of approximately 4,000 jobs annually over the next decade. Additionally, the state could see an annual GDP increase of $233 million for the first ten years, followed by $482 million annually after 2035.

Mike O’Halloran, NFIB Delaware State Director, remarked, “Delaware’s small businesses are essential to the state’s economy and job growth.” O’Halloran emphasized the risks posed by the expiration of the deduction, stating, “If Congress allows the 20% Small Business Deduction to expire, a massive tax hike on Delaware’s small businesses will take effect, stifling growth, putting the brakes on hiring, and endangering countless small businesses.”

The deduction is part of the Tax Cuts and Jobs Act of 2017 and plays a critical role in enabling small businesses to grow. Without Congressional action to extend it, the report warns that nine out of 10 small businesses nationwide could face a significantly higher tax load, threatening economic growth and stability.

For more details on NFIB’s advocacy and to review the Delaware report, visit the website www.nfib.com/stopsmallbiztaxhike.