Last Frontier News

Alaska's economy could see significant benefits if Congress decides to extend the 20% Small Business Deduction, according to recent research. The deduction, part of the 2017 Tax Cuts and Jobs Act (TCJA), is currently set to expire at the end of 2025.

The National Federation of Independent Business (NFIB) released its 2024 NFIB Tax Survey alongside a report with Ernst & Young (EY), highlighting the economic impact of maintaining this tax provision. EY estimates that extending the deduction would increase U.S. job equivalents at small businesses by approximately 1.2 million jobs annually in the first decade, eventually reaching 2.4 million jobs each year thereafter.

In terms of gross domestic product, EY states, "permanently extending the Section 199A deduction is estimated to increase US GDP at small business by $75 billion annually over the first 10 years; and growing over time to $150 billion annually each year thereafter." For Alaska specifically, this translates to an annual addition of 3,000 jobs and $175 million in GDP for the first ten years, increasing to 5,000 jobs and $360 million each year after 2035.

The NFIB Tax Survey also indicates potential consequences if the deduction expires: "61% plan to raise prices, 44% will postpone or cancel capital investments, 36% will postpone or cancel hiring additional employees," among other impacts.

Jeff Brabant, NFIB’s vice president of Federal Government Relations, addressed these findings before the Senate Committee on Finance last Thursday. He stated: “Members of Congress should ask themselves if they really believe it when they say, ‘small businesses are the backbone of America.’ If they truly believe that statement and value small businesses in their communities, then making the 20% small business deduction permanent should be an easy decision.”

The typical member of NFIB employs between one and nine people with gross sales around $500,000 annually. More information can be found on their website or through their social media channels.

For eight decades, NFIB has advocated for America's small and independent business owners across all state capitals and Washington D.C., remaining committed exclusively to these enterprises since its founding in 1943.