Hawkeye Reporter

The National Federation of Independent Business (NFIB) has released a report detailing the potential benefits and risks associated with the 20% Small Business Tax Deduction in Iowa. According to the report, there are over 282,000 small businesses in Iowa that may encounter higher taxes if Congress fails to make the deduction permanent this year. The potential expiration of this provision could lead to significant economic challenges for small businesses in Iowa and throughout the United States.

The report highlights a potential disparity in tax rates if the deduction isn't extended. While the C-Corp tax rate in Iowa would remain at 28.1%, the tax rate for small businesses could rise to 43.4%.

Maintaining the deduction could yield economic advantages, ensuring competitive tax rates for small businesses. It is projected that Iowa could see an addition of 12,000 new jobs annually over the next decade if the deduction continues. Moreover, there could be an annual GDP growth of $562 million for the first ten years, increasing to $1.16 billion per year after 2035.

Matt Everson, NFIB Iowa State Director, stated, “Iowa’s small businesses contribute a great deal to our communities and our state as a whole. Congress must not let the 20% Small Business Deduction expire. A massive tax hike on small businesses will hinder growth and hiring. Capitol Hill must act quickly to protect small businesses and make the small business tax deduction permanent.”

The 20% Small Business Tax Deduction was part of the Tax Cuts and Jobs Act of 2017, aimed at enabling small business owners to expand and create jobs. Failure to make this deduction permanent could result in nine out of ten small businesses nationwide facing a higher tax load, threatening jobs and economic stability.

For more detailed information and to view Iowa's specific report, visit the NFIB website.