Pelican State News

This morning, The Advocate newspaper published a guest editorial by NFIB State Director Leah Long discussing the importance of Congress making the 20% small business deduction permanent.

Leah Long explains that running a small business is challenging, particularly in difficult economic times. Inflation is increasing costs and altering consumer spending habits, making it hard for small businesses to meet expenses and remain operational. "Unless Congress moves fast, it will become even harder for local businesses to stay afloat," she warns.

In 2017, Congress passed the Tax Cuts and Jobs Act, which included a provision allowing small businesses to deduct 20 percent of qualified income from their federal taxes. This was the largest deduction for small businesses in U.S. history and significantly impacted communities by facilitating growth and job creation among Main Street businesses.

However, this deduction is set to expire on January 1, 2026. If allowed to lapse, nine out of ten small businesses nationwide could face significant tax increases, leaving them with less capital to operate or invest locally. Given the tight profit margins typical for small businesses, Long argues that such an increase could force some out of operation.

Long advocates for passing the Main Street Tax Certainty Act, which has bipartisan support and would make this deduction permanent. She notes that while the NFIB Small Business Optimism Index rose slightly in June to 91.5, it still remains below its 50-year average for over two years.

The original intent behind including the deduction in the 2017 tax bill was to level the playing field between local businesses and large corporate competitors. Allowing it to expire would mean that the benefits of the bill largely favored Wall Street over Main Street.

According to Long, making this deduction permanent is about more than just tax relief; it's about providing stability and confidence so owners can grow their businesses without fearing financial instability.

Most of Louisiana's congressional delegation supports this move. Senators Bill Cassidy and John Kennedy co-sponsor the Senate version of the Main Street Tax Certainty Act. House Speaker Mike Johnson and Representatives Garrett Graves, Clay Higgins, and Julia Letlow back its House counterpart.

Long emphasizes that small business is vital to Louisiana's economy as they represent most state enterprises and employ nearly half of its private-sector workforce. They also contribute significantly to community initiatives like school yearbooks and local charities.

Passing this act would strengthen these local entities financially and reduce uncertainties hindering their future planning efforts—a step toward securing a brighter economic outlook for all involved.

Leah Long serves as Louisiana director at National Federation Independent Business (NFIB).