Peace Garden News

The National Federation of Independent Business (NFIB) has released a report emphasizing the potential impacts of a small business tax policy change on North Dakota. As the leading advocate for small businesses in the United States, NFIB calls attention to the 20% Small Business Tax Deduction, which may face expiration unless Congress decides to make it permanent.

The report outlines the adverse effects the expiration of this deduction could have on the more than 76,000 small businesses operating in North Dakota. NFIB warns of considerably higher taxes for these small enterprises, which could slow down economic activity and impose financial challenges on businesses at the local level.

"If the 20% Small Business Deduction expires, small businesses will face a huge tax hike that will limit their ability to hire and grow. Congress must act quickly to protect small businesses," said Don Larson, NFIB North Dakota State Director.

A stark comparison is drawn in the report between the potential tax scenarios for small and large businesses. Without the deduction, small business tax rates would increase sharply to 42.1%, while the C-Corp tax rate would remain at 25.31%.

Retention of the deduction could foster economic benefits, such as job creation. The report predicts North Dakota could see 4,000 new jobs annually over the next decade, along with a GDP increase of $226 million annually for ten years, rising to $467 million per year beyond 2035.

The 20% Small Business Tax Deduction is a pivotal component of the Tax Cuts and Jobs Act of 2017, which aims to facilitate expansion and employment for small business owners. Should Congress not act to make the deduction permanent, a significant tax hike would affect nine out of ten small businesses, potentially threatening jobs and economic stability across the nation.

For more on NFIB's advocacy and access to the detailed report for North Dakota, visit their website.