Small businesses breathe a sigh of tax relief after passage of the Big, Beautiful Bill

Op-ed views and opinions expressed are solely those of the author.

Since 2017, the Small Business Tax Deduction has allowed small businesses to deduct up to 20 percent of their business income. Without congressional action, this 20 percent deduction would have expired at the end of this year, leaving small businesses—the engine of the U.S. economy— in the proverbial dust.

The passage of President Donald Trump’s Big, Beautiful Bill on July 4, 2025, by the Republican-led Congress saved over 33 million small businesses from a 20 percent tax hike. Included in the legislation was the 20 percent Small Business Tax Deduction (Section 199A), bringing much-needed tax relief to 9 out of 10 small businesses.

This permanent tax relief immediately impacted small business optimism—rising 3 points above a 52-year average, and continues to rise as small business owners finally have confidence after years of uncertainty during the pandemic and the Biden administration.

“What we recently found is that in August, we’re three points above the 52-year average [for small business optimism], and this has gone up since January, and the reason for that is the 20% Small Business Tax Deduction was included in the One Big Beautiful Bill Act down in D.C., and that did get made permanent. That means that our small business owners are not going to be facing a 20% tax increase come the end of the year,” noted Greg Moreland of the National Federation of Independent Businesses (NFIB).

A study conducted on behalf of the NFIB found that this permanent extension of the Small Business Tax Deduction is a direct benefit to U.S. workers through increased labor productivity, wages, and employment.

According to the survey, the permanent tax deduction is estimated to generate 1.2 million jobs, on average, in each of the first 10 years, and 2.4 million jobs each year thereafter. In relation to GDP, the permanent 20 percent deduction will increase U.S. GDP at small businesses by $75 billion annually, on average over the first 10 years, and is estimated to grow over time to $150 billion annually.

“The Section 199A deduction reduces capital and labor taxes. Specifically, by lowering the tax burden on investment, the Section 199A deduction decreases the cost of capital, encourages investment, and results in more capital formation in the United States. With more capital available per worker, labor productivity rises. This ultimately increases the real wages of workers, gross domestic product (GDP), and Americans’ standard of living,” the study concludes.

“Making the 20% Small Business Tax Deduction (Section 199A) permanent is a great thing for small businesses. And it’s nice that NFIB’s Pennsylvania director recently said, “We’re three points above the 52-year average [for small business optimism].”

But small businesses have many concerns about the future. And the NFIB’s Federal Government Relations principal recently wrote to two senators that “Small businesses are under a barrage of threats coming from Washington, D.C.,” mentioning a number of proposals that would have “devastating effects” on small businesses.

“The NFIB’s insights are valuable, but not proof of small business sentiment. They have around 300,000 members, less than one percent of the nation’s small businesses,” said Bruce de Torres, communications director of the American Small Business League.

The 20 percent permanent tax deduction has leveled the playing field and empowered small businesses to grow and invest in their businesses and their communities. Yet, the Democrat Party’s appetite for raising taxes to subsidize failed government programs is an ongoing threat to the engine of the U.S. economy. If American workers and small business owners are forced to live within their means, so should Washington D.C. bureaucrats, who have an insatiable appetite to grow government by increasing taxes.

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Tim Tapp

Tim Tapp is the host of the syndicated, conservative talk show "Tapp" into the Truth. He calls East Tennessee home, where he broadcasts and writes. He also still works in Quality Assurance for a food manufacturing company as he takes up the cause of defending our republic. Find out more at www.tappintothetruth.com.