Old Dominion News

NFIB has released a new report detailing the implications of a potential tax increase on Virginia's small businesses. The report emphasizes the importance of making the 20% Small Business Tax Deduction permanent, a measure that brought financial relief to small businesses. According to the NFIB, failure to do so could result in higher taxes for Virginia's 850,000 small businesses, potentially disrupting the economic landscape of both the state and the broader U.S. economy.

The report draws attention to a disparity in tax rates, suggesting that if the deduction is not made permanent, small businesses in Virginia may face a tax rate of 45.35%, in contrast to the C-Corp tax rate of 27%. The report argues that maintaining the deduction would support economic parity and offers projections including the creation of 33,000 jobs annually in Virginia over the next decade, as well as an annual GDP boost of $1.9 billion in the first decade and $3.94 billion annually after 2035.

Julia Hammond, NFIB State Director, stated: "The 20% Small Business Tax Deduction has made a big difference to Virginia’s small businesses these past few years. It helped provide much-needed financial relief as they dealt with inflation, labor shortages, and rising costs. If this deduction expires, Main Street businesses would face a steep tax hike on top of everything else, making it even harder for them to grow, create jobs, and support their communities."

This tax deduction, part of the Tax Cuts and Jobs Act of 2017, has enabled small business owners to expand their operations, hire more employees, and increase wages. Should Congress fail to act on making this provision permanent within the year, it is estimated that nine out of ten small businesses would encounter higher tax obligations, thereby jeopardizing jobs and economic stability at large.