News Summary
Congress has permanently established the 20% Small Business Tax Deduction, also known as Section 199A, offering long-term tax relief for small businesses. This significant move is expected to empower over 33 million small business owners to invest, grow, and create jobs. By avoiding a tax hike that could have impacted small businesses starting in 2025, this decision is anticipated to drive economic activity, particularly in Arizona, where it could boost the economy by over $1.4 billion annually while creating approximately 26,000 jobs each year.
Arizona – Congress has permanently established the 20% Small Business Tax Deduction, also known as Section 199A, providing long-term tax certainty for small businesses across the nation. This decision ensures that small businesses can now deduct up to 20% of their income, enabling them to grow, invest, and contribute to their communities.
The law, signed by President Trump, will prevent a significant tax hike that would have affected over 33 million small business owners at the end of 2025. The permanency of this tax deduction is expected to significantly benefit Main Street businesses, allowing them to thrive, hire more employees, and better compete against larger corporations.
Since its introduction in 2017, the Small Business Tax Deduction has proven advantageous for nine out of ten small businesses structured as pass-through entities. Recent surveys conducted by the National Federation of Independent Business (NFIB) indicate that small business optimism is rising, reaching a five-month high following this announcement.
Additional Provisions to Support Small Businesses
The new tax law also includes several provisions favorable to small businesses. These provisions consist of the extension of the 2017 marginal tax rates, which prevent up to a 4% tax hike for small businesses and their employees. Furthermore, enhanced expensing and depreciation rules under Sections 179 and 168(k) allow business owners to invest confidently in growth opportunities.
Additionally, increased reporting thresholds for IRS forms 1099-K, 1099-NEC, and 1099-MISC will lessen the compliance burden for businesses that utilize digital payment platforms or hire independent contractors. The permanent estate tax exemption is also a supportive measure for business owners who aim to pass their businesses to the next generation or maintain local ownership.
Economic Impact
An NFIB-commissioned study conducted by EY found that making the Small Business Tax Deduction permanent could increase Arizona’s economic activity by over $1.4 billion annually. This adjustment is projected to lead to the creation of approximately 26,000 jobs each year in the state.
The continuation of the Small Business Tax Deduction is viewed as a crucial element in sustaining economic momentum for small businesses. If this deduction were not made permanent, small businesses in Arizona might have faced significantly higher taxes, likely resulting in negative economic repercussions both throughout the state and across the country.
Conclusion
The decision by Congress to make the 20% Small Business Tax Deduction permanent marks a significant milestone for small business owners. As they plan for the future in a fluctuating economic landscape, the assurance of long-term tax stability will empower them to invest further in their growth and strengthen their contributions to local and national economies.
Deeper Dive: News & Info About This Topic
- AZ Free News: Congress Makes 20% Small Business Tax Deduction Permanent
- NFIB: Benefits of 20% Small Business Tax Deduction in Arizona
- AZ Big Media: Arizona Taxes on Small Business Compared with the U.S.
- NFIB: New State-Specific Tools for 20% Small Business Tax Deduction
- Wikipedia: Taxation in the United States
Author: STAFF HERE PHOENIX WRITER
The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
