Tax Insights for Small Business Owners in 2025: What You Need to Know

Tax Reform for Small Businesses: Why Main Street Needs Change Now

Update The Unsung Heroes of Tax Reform: Small Businesses As we reflect on 20 years of advocacy for tax reform, it's clear that the tax landscape for small businesses is changing, but the journey is still fraught with challenges. Too often, small business owners feel that the tax code is not designed with their needs in mind. They echo a widespread sentiment that the system is skewed towards larger corporations, a concern that has only grown since the enactment of policies like the Tax Cuts and Jobs Act (TCJA). Why Taxation Matters to Small Businesses Many people mistakenly believe that tax cuts universally benefit all businesses; however, this assertion overlooks the complexities faced by small enterprises. According to the Small Business Majority, a staggering 74% of Section 199A's tax benefits have flowed to the wealthiest 5% of businesses, leaving true Main Street businesses with minimal support. This disparity begs a fundamental question: What do small business owners truly need from tax reform? The answer is far from simple. Mobilization for Meaningful Change Since the passage of the TCJA, advocacy groups like Small Business Majority have mobilized to ensure that the voices of small business owners are heard. They argue that instead of blanket tax cuts, it is crucial to implement targeted reforms that genuinely assist the majority of entrepreneurs. For example, proposals to allow pass-through entities to deduct the first $25,000 of qualified business income aim to directly address the needs of small businesses earning below $400,000, which represent a large majority of tax filers. The Equality in Taxation Debate Local and national discussions on tax policy highlight a crucial issue: the equitable treatment of small businesses in comparison to large corporations. While larger enterprises often have the means to leverage tax breaks and maximize deductions, many small businesses struggle to navigate the complexities of the tax code. According to the Urban Institute, compliance costs disproportionately burden smaller businesses, consuming a more significant share of their resources relative to their larger counterparts. Tax reforms should focus on leveling this playing field, enabling small businesses to thrive rather than merely survive. Looking Ahead: The Future of Small Business Taxation As tax policies evolve, the dialogue surrounding them must prioritize small businesses as crucial players in the economy. Looking ahead, members of Congress should leverage this unique moment to implement comprehensive tax reforms that benefit a broad range of businesses. By keeping the concerns of small business owners in the forefront, lawmakers can create a tax system that fosters growth and innovation—empowering the backbone of the economy. In this shifting landscape, small businesses can prepare for the future by understanding how ongoing changes in tax law impact their operations. Engaging with tax professionals and advocacy groups can illuminate pathways toward financial health and sustainability.