Silver State Times

Nevada’s economy may face challenges if the 20% Small Business Deduction in the federal tax code is allowed to expire next year, as indicated by recent reports. Tray Abney, state director for the National Federation of Independent Business (NFIB) in Nevada, underlined the precarious situation of small business owners in the state. “Nevada’s small business owners are hanging on by a thread,” Abney noted. “Congress needs to keep the 20% Small Business Deduction from expiring, and one report has some hard numbers showing why.”

Last week, NFIB released its 2024 NFIB Tax Survey alongside another report co-produced with EY (Ernst & Young), which highlighted the significance of the Small Business Deduction under the 2017 Tax Cuts and Jobs Act (TCJA) for state economies. It is noteworthy that corporate tax benefits within the TCJA have been made permanent.

“There were some Nevada-specific numbers on the jobs and GDP to be gained by making the 20% Small Business Deduction permanent," added Abney, emphasizing the importance for local congressional representatives to consider these figures.

EY's report estimates that the tax amendment could increase US job equivalents at small businesses by about 1.2 million annually over the first decade, reaching 2.4 million each year subsequently. On economic growth, "permanently extending the Section 199A deduction is estimated to increase US GDP at small businesses by $75 billion annually over the first 10 years, and growing over time to $150 billion annually each year thereafter."

For Nevada, this translates to an increase of 12,000 jobs and $659 million in GDP annually for the first 10 years, rising to 24,000 jobs and $1.3 billion in GDP annually after 2035.

The NFIB Tax Survey also reveals potential impacts if the Small Business Deduction is not extended. Among respondents, 61% would raise prices, 44% would delay or cancel investments, and 36% would postpone or halt hiring. Further, 16% would freeze wages or reduce benefits, while 10% would boost efficiency.

In related developments, Jeff Brabant, vice president of Federal Government Relations at NFIB, testified before the Senate Committee on Finance, ending with a probing statement: “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.”

NFIB, a longstanding advocate for small businesses, notes that its typical member employs between one and nine people and reports approximately $500,000 in annual sales.

For further information on Nevada small-business news, visit www.nfib.com/nevada.