Maryland State Wire

The National Federation of Independent Business (NFIB), a prominent advocate for small businesses in Maryland, released a report highlighting the impact of the 20% Small Business Tax Deduction on the state's economy. The deduction, if made permanent, is expected to bring significant advantages. However, concerns have been raised that if Congress does not act, the 668,000 small businesses in Maryland could experience a substantial increase in taxes, potentially resulting in economic slowdown and increased financial pressure.

The report emphasizes the disparity in tax rates that would arise if the deduction is not extended. Currently, Maryland's C-Corporations face a tax rate of 25.9%, while the small business rate could rise to 42.6% if the deduction expires.

Retaining the deduction could lead to significant benefits, including making small business tax rates competitive with larger corporations. Maryland could see an annual increase of 42,000 jobs over the next decade and a GDP growth of $1.49 billion annually for the first ten years, with projections of $3.08 billion per year beyond 2035.

Mike O’Halloran, NFIB Maryland State Director, voiced his support for the permanent extension of the deduction: “Maryland’s small businesses create jobs and strengthen our state and local economies. If Congress allows the 20% Small Business Deduction to expire, a massive tax hike on small businesses will take effect. Maryland’s small businesses are already seeing a tax increase that was included in the state’s budget, now is not the time to increase taxes on the federal level too. Lawmakers must act quickly to protect small businesses and the communities they support.”

The 20% Small Business Tax Deduction was introduced as part of the Tax Cuts and Jobs Act of 2017, and has since helped numerous small business owners expand, hire, and increase wages. Without permanent Congressional action, nine out of ten small businesses could face heightened tax burdens, posing risks to jobs and economic stability.

For further details on NFIB's advocacy and to view the report, visit: www.nfib.com/stopsmallbiztaxhike.