Old North News

NFIB has published a report emphasizing the potential impact of tax changes on small businesses in North Carolina. The report warns that 1.1 million small businesses in the state might encounter increased taxes unless Congress makes the 20% Small Business Tax Deduction permanent this year. It discusses the potential negative effects on the U.S. economy, which might experience slowdowns and financial strain on local businesses as a result of the provision's expiration.

The tax deduction is contrasted with tax rates for larger corporations. In North Carolina, while the C-Corp tax rate will hold at 23.25%, small business tax rates could rise to 43.85% if the deduction is not maintained. Conversely, the report suggests that making the deduction permanent would benefit small businesses economically, leveling the playing field with larger corporations. It also forecasts 37,000 new jobs and a GDP increase of $1.82 billion annually for the next decade for North Carolina.

According to NFIB State Director Gregg Thompson, "This deduction has been a big help to North Carolina’s small businesses. Main Street businesses are dealing with rising prices and other uncertainties. If this deduction is allowed to expire, local businesses will see a steep increase in taxes, making it even harder for them to stay in business, keep people working, and support their communities."

Originally part of the Tax Cuts and Jobs Act of 2017, the 20% Small Business Tax Deduction has aided numerous small business owners in expanding, hiring, and raising wages. Without congressional action to make it permanent, most small businesses could face heavier tax burdens, threatening employment and economic stability.