Bluegrass Times

Business First of Louisville has published an opinion piece by NFIB State Director Tom Underwood, highlighting the urgency of making the 20% small business deduction permanent. This federal tax benefit is slated to expire in 2025.

Underwood warns that Kentucky's small businesses will face a significant increase in federal taxes unless Congress acts swiftly to extend this deduction. He points out that while Wall Street received permanent tax cuts in 2017, similar benefits for Main Street are temporary and set to expire soon.

The call to action involves urging Kentucky’s congressional delegation to back the bipartisan Main Street Tax Certainty Act. Without it, local businesses could face a sudden 20% tax hike, which many might not withstand given current economic challenges like inflation.

Underwood emphasizes that Congress initially included this deduction to help local businesses compete with national chains and foster community support through job creation. However, its impending expiration on December 31, 2025, creates uncertainty for business owners who need stability for future planning.

Despite bipartisan support on Capitol Hill, only four of Kentucky’s six U.S. representatives—Andy Barr, James Comer, Brett Guthrie, and Hal Rogers—have co-sponsored the bill so far. In the Senate, Rand Paul has shown his support as a co-sponsor.

Small businesses play a crucial role in Kentucky's economy; they represent 99% of all businesses according to the U.S. Small Business Administration. These enterprises are vital for job creation and community contributions but operate with slim profit margins. The combination of pandemic impacts and inflation already strains these businesses; a potential tax increase could further jeopardize their survival.

Underwood stresses the importance of making the deduction permanent through congressional action on the Main Street Tax Certainty Act to safeguard these enterprises' futures and bolster both state and national economies.