COMMENTARY: The big beautiful tax bill will bolster small business

Tax season continues on Capitol Hill, and just like so many Americans ahead of the April 15 deadline, lawmakers are tired and confused as they work on this large and sweeping legislation. In a hearing last week, members from both sides of the aisle fell asleep during committee meetings dealing with President Donald Trump’s tax proposal.

Although this large bill has many significant components, one of its lesser-known provisions will help your local business stay competitive in the market.

With many provisions from the 2017 Tax Cuts and Jobs Act set to expire at the end of the year, pressure is building on the legislation’s success and to improve our tax code. Last week, the House of Representatives approved the bill, known as the “One Big Beautiful Bill.”

While there are numerous provisions in this bill that would support America’s small businesses, the update to Section 199A, the qualified business income deduction, would allow small businesses to thrive.

This deduction is crucial for small businesses, allowing owners to deduct qualified business income. For many small businesses, this deduction has enabled them to remain afloat despite challenging market conditions.

The 199A deduction ensures that small businesses can confidently invest in their businesses.

For instance, according to the National Association of Manufacturers, the Section 199A deduction “freed up significant capital for smaller manufacturers to reinvest in their businesses” and allowed 2018 to be “the best year for manufacturing job creation in 21 years” and the best year for “wage growth in 15 years.”

Not only does the One Big Beautiful Bill make the qualified business income deduction permanent, but it also increases the amount a small-business owner can deduct from 20 percent to 23 percent.

According to Ernst &Young Global Ltd., these qualified business income deductions were designed so that owners of sole proprietorships could “keep pace with the significant corporate income tax rate cut provided by the TCJA.”

The deduction has worked as planned, and now millions of business owners nationwide can save their hard-earned dollars and invest.

In addition to the more than 25 million business owners who claimed a Section 199A deduction in 2021, Ernst &Young estimates that the deduction has supported 2.6 million workers and generated $325 billion in gross domestic product.

Adam Temple of the National Federation of Independent Businesses explained that Section 199A “has empowered 25.9 million small businesses to hire more employees, expand operations, and invest in their local communities.” He explained that the proposed tax bill “would not only prevent a massive tax hike on small businesses, but it would also provide a tax cut for tens of millions of small-business owners.”

When examining industries nationwide, it is clear that the qualified business income deduction has already helped many small businesses. For example, the Farm Bureau estimates that 45 percent of family farms and 70 percent of farms and ranches “where the principal operator is primarily a farmer or rancher” have benefited from the deduction.

Family farms are not the only small businesses that have benefited from the 199A deduction; various small businesses profit from the deduction. By allowing small businesses to retain more of their money, the One Big Beautiful Bill will enable America’s small businesses to continue operating.

As the tax debate continues, small-business owners seek certainty and permanence in the tax code. The people want a tax code that creates growth for small businesses.

We need to get the One Big Beautiful Bill across the finish line to ensure small businesses can continue to thrive under the qualified business income deduction.

Marc Cadin is the CEO of Finseca. He wrote this for InsideSources.com.