Constitution State News

The National Federation of Independent Business (NFIB) released a report on April 15, 2025, discussing the potential impacts on small businesses in Connecticut if the 20% Small Business Tax Deduction is not made permanent. The report highlights that over 365,000 small businesses in Connecticut could face higher taxes without congressional action.

According to the report, the discrepancy between tax rates for small businesses and larger corporations would widen significantly if the deduction lapses. While the C-Corp tax rate would stay at 29.25%, the rate for small businesses would increase to 46.59%.

Moreover, the NFIB report projects significant economic benefits if the deduction is maintained. This includes a level playing field for small businesses, the creation of 14,000 new jobs annually in Connecticut over a decade, and an annual GDP increase of $887 million in the first ten years, rising to $1.83 billion per year after 2035.

Andy Markowski, NFIB's Connecticut State Director, emphasized the challenges faced by small businesses, stating, “Connecticut small businesses have a lot on their hands with rising costs, burdensome regulations, and workforce shortages.” He further urged Congress to act quickly, saying, “If Congress allows the 20% Small Business Deduction to expire, the massive tax hike will exacerbate the struggle many small business owners face. Congress must act quickly to protect our small businesses.”

The 20% Small Business Tax Deduction, established under the Tax Cuts and Jobs Act of 2017, has played a crucial role in enabling small businesses to expand and hire. If not made permanent by Congress, as the NFIB indicates, a higher tax burden could impact nine out of 10 small businesses, affecting job creation and economic stability across the country.

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For additional details on the NFIB’s advocacy work or to access the full Connecticut report, visit: NFIB-20-Small-Business-Deduction-Impact-CT.pdf.

NFIB has been advocating for small and independent business owners for 80 years. The nonprofit, nonpartisan organization operates in Washington, D.C., and all 50 state capitals, committed to representing small businesses since its foundation in 1943. More information can be found at nfib.com.