Magnolia State News

NFIB, a prominent small business advocacy organization, has released a report discussing the potential impact of not making the 20% Small Business Tax Deduction permanent in Mississippi. According to the report, if Congress fails to take action this year, Mississippi's 283,000 small businesses could face significantly higher taxes. This includes the risk of economic slowdown and increased financial strain.

The report highlights the potential disparity in tax rates between small businesses and larger corporations if the deduction is not extended. Without it, the small business tax rate in Mississippi could rise to 44%, compared to a 26% rate for C-Corp entities.

Making the deduction permanent could bring numerous benefits, as noted in the report. It could help redirect the small business tax rate to an equitable level and potentially create 9,000 jobs annually in Mississippi over the next decade. Additionally, the state could see an annual GDP increase of $362 million in the first ten years and $747 million per year after 2035.

Leah Long, NFIB State Director, emphasized the importance of the deduction, stating, “This deduction has meant a lot to local businesses. Main Street businesses already are contending with higher costs, a labor shortage, and uncertainty about what the future holds. If this deduction is allowed to expire at the end of the year, Main Street businesses would see a big increase in taxes that would make it even harder for them to compete with national chains, let alone grow, create jobs, and support their communities.”

The tax deduction is a significant provision of the Tax Cuts and Jobs Act of 2017, playing a role in enabling small business owners to expand their operations, hire employees, and increase wages. Failure to make it permanent could see nine out of 10 small businesses facing a higher tax burden, which could threaten jobs and economic stability nationwide.