Extending tax relief for small businesses

By Dani Sheehan.  

The Main Street Tax Certainty Act makes permanent tax relief for small businesses as passed in the Tax Cuts and Jobs Act of 2017.  

A 20% qualified business income deduction, section 199A, for small businesses organized as pass through entities that started in the Tax Cuts and Jobs Act, is slated to sunset by the end of 2025 while the C-corp rate remains at the 2017 reduced level. This will create an unfair playing field, leaving small business owners (like the preponderance of roofing contractors) at a disadvantage.   

Deb Mazol, who works on the D.C. team with the National Roofing Contractors Association (NRCA), explains the significance of the bill: 

Section 199A is an essential part of the tax code. Without it, individually and family owned Main Street businesses would pay significantly higher taxes, putting them at a competitive disadvantage and accelerating the economic consolidation taking place in our economy. Main Street businesses are the backbone of the economy, and those organized as pass-through entities employ the most private-sector workers and comprise 95% of all businesses.  

Most small businesses are organized as pass-throughs, which pass business earnings through to their individual tax returns and pay taxes on business income at the individual income tax rate. By the end of 2022, there were 32.5 million small businesses in the U.S. Every year, 1.5 million jobs are created by small businesses, accounting for 64% of new jobs. In fact, 46.4% of Americans work for small businesses. 

Small businesses act as an integral part of the U.S. economy and its growth. However, small businesses also face many obstacles and risks such as the inability to secure finances and limited access to products and resources. According to the Bureau of Labor Statistics, 18% of small businesses fail within their first year with rates increasing to 50% after five years. We need to do everything we can to level the playing field for these small businesses and ensure parity for all types of business.   

Congressman Lloyd Smucker recently re-introduced the Main Street Tax Certainty Act (H.R. 4721), bipartisan legislation, which would make Section 199A permanent. Without this permanent extension, there will be no tax equity between smaller businesses and large corporations.   

Not extending tax breaks to small business pass-throughs will create an unfair market disadvantage for employers that mean so much to our communities. It is paramount to encourage the growth of small businesses through measures like the Main Street Tax Certainty Act as these businesses are a vital part to drive US innovation and competition.  

Urge your members of Congress to co-sponsor the Main Street Tax Certainty Act by visiting NRCA’s grassroots website to directly contact Congress and join the NRCA in advocating for our industry at Roofing Day in D.C. April 16-17, 2024.